Government offers better oil and gas contracts<\/p>\n
A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
Businesspeople willing to invest in the 11 oil and gas blocks
\ncurrently being offered by the government could obtain a greater
\nproduction split of up 25 percent for oil and 40 percent for gas,
\naccording to a government proposal released on Wednesday.<\/p>\n
The improved contractual terms are aimed at attracting more
\ninvestment to the country's oil and gas sectors. Last year, of 14
\noil and gas blocks offered by the government, only one block was
\ntaken up by investors.<\/p>\n
Under traditional production-sharing contracts, investors are
\nentitled to 15 percent of oil output and 30 percent of gas
\noutput, with the remainder going to the government.<\/p>\n
\"The offer is being made to attract new investment to the oil
\nand gas sectors,\" said Iin Arifin Takhyan, director general for
\noil and gas at the Ministry of Energy and Mineral Resources,
\nafter a public expose for investors to explain the new
\ncontractual terms.<\/p>\n
According to one estimate, total investment in the 11 oil and
\ngas blocks could reach US$160 million in exploration activities
\nin the first three years, which would have a multiplier effect on
\nthe national and regional economies.<\/p>\n
The 11 new contract areas are located in Jambi and South
\nSumatra (two contracts), off the coast of Rembang in Central Java
\n(one), off the coast of East Java (five), off the coast of Bali
\n(two) and off the coast of Tarakan island in East Kalimantan
\n(one).<\/p>\n
The oil and gas sectors have been the main source of income
\nfor the government over the past three decades.<\/p>\n
Last year, 29 percent of the government's income came from
\nthese sectors, with investors spending $5 billion to $6 billion
\nrespectively on exploration and production activities, or about
\n40 percent of total investment in the country for the year.<\/p>\n
Final bids for the 11 concessions should be accepted by the
\ngovernment in July, with the contracts to be signed in August.<\/p>\n
The oil and gas output investors can expect from the 11 blocks
\ndiffers, depending on geographical and geological conditions, and
\nthe potential amount of oil and gas reserves in the respective
\nareas, Iin said.<\/p>\n
\"This is a precedent. In the past years, the more attractive
\nconcessions used to be applied only for oil and gas blocks which
\nwere hard to locate and explore, such as in the deep sea,\" he
\nsaid.<\/p>\n
The only oil and gas block contract that was signed last year
\nwas for the Muara Bakau block in the Makassar Strait.<\/p>\n
\"Security, regional autonomy and illegal levies have become a
\nconcern for the investors, which put them on the sidelines.<\/p>\n
\"Moreover, other countries have offered better contractual
\nterms for investors,\" Iin said.<\/p>\n
Vietnam, for example, has offered investors 65 percent of
\ntheir oil and gas output.<\/p>\n
Iin conceded that the output portions the government was
\noffering were not as large as Vietnam, but Indonesia would remain
\nattractive because of the high rate of exploration success for
\noil and gas.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-offers-better-oil-and-gas-contracts-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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