Investors want higher gas output split<\/p>\n
P.C. Naommy, The Jakarta Post, Jakarta<\/p>\n
Oil and gas implementing body BP Migas has rejected a request
\nfrom ExxonMobil Indonesia Inc. and ConocoPhilips for a higher
\nproduction split in the Blok A gas field in Lhokseumawe, Aceh.<\/p>\n
BP Migas chairman Rachmat Soedibyo said on Wednesday the two
\nproduction sharing contractors had requested the production split
\nbe revised to 50:50 from the current 65:35 because of higher than
\nexpected production costs.<\/p>\n
Speaking at a hearing with House of Representatives Commission
\nVIII, Rachmat said the high content of corrosive gases such as
\ncarbon dioxide and sulfur in the gas field could force the
\ncompanies to use stainless steel or chrome equipment, which would
\nraise production costs.<\/p>\n
"But we still have to reevaluate the urgency of using such
\nhigh-cost equipment for the gas field," said Rachmat, pointing
\nout that the Blok A gas field would produce gas for only a
\nrelatively short period due to its limited reserves.<\/p>\n
He said his office had rejected the companies' proposal and
\nhad asked both ExxonMobil and Conoco to come up with a new
\nproposal and cost calculation within a month so they could
\nimmediately begin gas exploration activities.<\/p>\n
"After two to three years of exploration, the Blok A gas field
\nis expected to start production in 2007," Rachmat said.<\/p>\n
Lawmakers previously called on ExxonMobil and Conoco to
\nquickly begin exploration in the gas field in anticipation of
\nrising domestic gas demand.<\/p>\n
Elsewhere, Rachmat said the country currently had some 160
\ntrillion cubic feet of gas reserves, including in critical
\nregions such as deep seas and remote land areas.<\/p>\n
He also said the government should provide incentive for
\ninvestors to develop gas reserves in the critical regions.<\/p>\n
He said the incentives could be in the form of more favorable
\nproduction splits or cost recovery. "It's been more than 10 years
\nsince the last incentive was given by the government in 1992."<\/p>\n
Minister of Mineral Resources and Energy Purnomo Yusgiantoro
\nasked President Megawati Soekarnoputri during a recent Cabinet
\nmeeting to revise the current production split between the
\ngovernment and oil and gas investors, since the government had
\ndropped its previous "lex-specialist" policy.<\/p>\n
The lex-specialist policy eased investment in gas and oil
\nthrough the provision of duty-free facilities for imported
\nmaterials used in gas and oil production.<\/p>\n
In his proposal, Purnomo offered alternatives for the oil and
\ngas production splits. He suggested the production split for oil
\nbe changed to 80:20 or 75:25 from the current 85:15, and the
\nsplit for gas 60:40 or 55:45 from the current 70:30.<\/p>\n
According to Purnomo, the President has yet to respond to the
\nproposal.<\/p>\n
The government has previously provided higher production split
\nfor investors exploring new oil and gas fields. The incentive
\nwas aimed at luring new investment in the sector.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/investors-want-higher-gas-output-split-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}