Govt offers alternatives for oil, gas concessions<\/p>\n
Fitri Wulandari
\nThe Jakarta Post
\nJakarta<\/p>\n
The government has offered a more flexible system for
\ninvestors to be granted oil and gas concessions in the country as
\npart of its bid to revive the investment climate in the sector.<\/p>\n
Iin Arifin Takhyan, director general of oil and gas at the
\nMinistry of Energy and Mineral Resources said the government had
\nprovided two alternative ways for investors to get oil and gas
\nblocks apart from the normal bidding rounds.<\/p>\n
\"We want to make easier procedures for investors interested in
\noil and gas concessions,\" Iin said over the weekend.<\/p>\n
Aside from the usual bidding round, the government will make
\noil and gas blocks that failed to attract bidders in past
\nbidding, available to any interested investor.<\/p>\n
\"If there is a company interested in a certain block, it can
\nsubmit proposal. The government will award the block if they meet
\ncertain requirements,\" Iin said.<\/p>\n
To maintain transparency, the government will also offer the
\nblock eyed by the company in question to other companies through
\nthe media.<\/p>\n
\"We will give one month to invite other interested firms. If
\nno companies submit their proposal, the award goes directly to
\nthe first company that submitted the proposal,\" he added.<\/p>\n
The block will be open for bidding if there are other firms
\nvoicing an interest, Iin said.<\/p>\n
Currently, a total of 16 oil and gas blocks remain in the
\ngovernment's hands becaue they did not attract bidders during a
\nregularly scheduled auction. The government will still make the
\nblocks available for interested investors.<\/p>\n
Three companies have voiced their interest in three oil and
\ngas blocks, he said.<\/p>\n
Companies now can also propose to get oil and gas blocks of
\ntheir interest after they conduct a study of their own, Iin
\nadded.<\/p>\n
Iin said the company must submit proposals of their working
\ncommitment program as well as the result of their studies.<\/p>\n
According to Iin, there are five companies that have submitted
\nproposals on five oil and gas blocks apart from the ones offered
\nin the bidding round.<\/p>\n
Iin brushed aside speculation that the steps meant that the
\ngovernment was selling off the country's resources all too
\neasily.<\/p>\n
\"We will choose companies that meet the requirements both
\nfinancially and technologically to run the oil and gas blocks,\"
\nhe stressed.<\/p>\n
Iin said the steps are expected to boost development of new
\nhydrocarbon resources to maintain production sustainability amid
\nan ongoing decrease in the country's oil and gas output.<\/p>\n
Oil and gas production in Indonesia continues to drop as the
\ninvestment climate becomes unfavorable.<\/p>\n
A statistical report from the Ministry of Energy and Mineral
\nresources showed that the country's oil production steadily
\ndeclined from 1.6 million barrels per day (bpd) in 1995 to 1.4
\nmillion bpd in 2000. It dipped down to 1.34 million bpd in 2001.<\/p>\n
Natural gas production is also down from 3 trillion standard
\ncubic feet (tcf) in 1995 to 2.9 tcf in 2000 and 2.8 tcf in 2001.<\/p>\n
The number of production sharing contracts awarded to foreign
\ncompanies also steadily declined from 29 in 1997 to 22 in 1998
\nand to four in 1999. It slightly up to seven in 2000 and nine in
\n2001. Last year, no contracts were signed except for the
\nextension of the Coastal Plains Pekanbaru, formerly operated by
\nPT Caltex Pacific Indonesia, for the new operator, a joint
\nventure of state oil and gas company Pertamina and the firm set
\nup by the Riau provincial administration.<\/p>\n
Energy analyst Kurtubi believed the strategy would help to
\nlure in more investors into the sector. However, he criticized
\nthe government for failing to address the real problems for oil
\nand gas investors.<\/p>\n
According to Kurtubi, the new oil and gas law which
\nliberalizes the sector tends to lengthen the process to carry out
\nupstream activities which is a serious drawback for investors.<\/p>\n
The Oil and Gas Law No. 22\/2001 has lifted the decades-long
\nmonopoly held by Pertamina over the sector, turning it into a a
\ncommon company equal to all contractors in the sector. The law
\nassigns two separate bodies to regulate and supervise the
\nupstream and downstream activities.<\/p>\n
The Oil and Gas Implementing Body (BP Migas) now holds the
\nauthority to sign oil and gas contracts with investors as well as
\nappoint sellers to sell government shares in contractors' oil and
\ngas production.<\/p>\n
Kurtubi said, under the law, investors must ask for approval
\nfrom the Ministry of Energy and Mineral Resources to participate
\nin the tender of new oil and gas blocks. But, once they win the
\ntender, they have to sign contracts with BP Migas.<\/p>\n
Should they find new resources, they still have to go to the
\nministry to get approval for exploitation.<\/p>\n
\"There are too many doors, which confuse investors. This needs
\nto be addressed by the government,\" he asserted.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-offers-alternatives-for-oil-gas-concessions-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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