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Govt plans to improve terms for oil drilling February 16, 2006

Posted by ekon in industri.
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The Jakarta Post – 2006-02-16 11:43:08

Bloomberg, Jakarta
February 16, 2006

Indonesia, Southeast Asia’s biggest oil producer, plans to give international energy companies more favorable terms in exploration contracts to attract investors and reverse a decline in output, Purnomo Yusgiantoro said today.

Companies won’t be required to drill wells should the seismic survey find no potential in the area, Purnomo told reporters. Under the current so-called production sharing contract with the government, companies must do seismic surveys and drill at the site regardless of the area’s potential.

“In future contracts, we won’t put drilling as part of commitment in exploration,” Purnomo said in Jakarta.

“Companies can decide themselves whether they want to continue with drilling based on the survey. It will give more flexibility to the contractors.”

Indonesia, with the second-lowest output among members of the Organization of Petroleum Exporting Countries, is seeking new reserves to replace aging fields and increase production. Investment in drilling for oil and gas fell by more than half in 2004. The country plans to invite bids for 28 oil and gas exploration areas later this month, Purnomo said.

Indonesia may also allow energy companies to explore in remote areas for the first time, using proceeds from their oil- and gas-producing units elsewhere in Indonesia, Kardaya Warnika, chairman of the state oil regulator BPMigas said today.

Indonesia has 60 hydrocarbon basins, only half of those have been explored. Most of the untapped basins are located in eastern Indonesia, where lack of infrastructure has hampered transportation and business activities.

Geologists estimate the nation’s potential resources at 77 billion barrels of oil and 332 trillion cubic feet of natural gas, according to the Ministry of Energy and Mineral Resources. The country pumped 1.061 million barrels a day of crude oil and condensate last year, missing its target of 1.075 million barrels a day, Kardaya said.

Indonesia currently gets 70 percent of the revenue from gas fileds while companies such as Unocal Corp, Exxon Mobile Corp. and Total SA get 30 percent.

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