Oil, gas concessions spark interest in 15 bidders<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
Fifteen companies have submitted their bids for eight oil and
\ngas concessions out of the 11 on the block, raising hopes that
\nthe investment climate in the sector has improved.<\/p>\n
Iin Arifin Takhyan, director general for oil and gas at the
\nMinistry of Energy and Mineral Resources, said the result was
\nmuch better than last year. He said that 40 companies had
\npurchased tender documents, of which 15 had proposed their bids
\nfor eight concessions.<\/p>\n
\"The result is better ... Maybe because the fiscal policy is
\nattractive or the investment climate is improving,\" Iin told
\nreporters on Thursday.<\/p>\n
Last year, the government auctioned off 14 oil and gas
\nconcessions, but the offer only drew one bidder. Many analysts
\nsubsequently warned that the investment climate in the country's
\noil and gas sector had waned, as it had in other industrial
\nsectors.<\/p>\n
The 11 concessions offered this year are located in Sumatra (2
\ncontracts), off the coast of Rembang, Central Java (1), off the
\ncoast of East Java (5), off the coast of Bali (2) and off the
\ncoast of Tarakan island, East Kalimantan (1).<\/p>\n
Iin said the 15 companies, in their proposed bids, detailed
\ntheir work plan for the concessions in which they are interested.<\/p>\n
\"The tender committee (formed by the government) will choose
\nwhich companies have offered the best three-year operational
\nprogram,\" Iin said.<\/p>\n
Details on the 15 companies -- 11 multinational and four local
\n-- are to be released publicly on Friday, he said, with winners
\nof the tender to be announced on Sept. 1.<\/p>\n
At this year's auction, the government offered a better
\nproduction-sharing deal in an effort to lure more investors,
\nwhich may have also affected the number of interested bidders.<\/p>\n
Under the standard production-sharing contracts, investors are
\nentitled to take 15 percent of their oil output and 30 percent of
\ntheir gas output, and the remainder goes to the government.<\/p>\n
For the concessions offered this year, however, the government
\nincreased the oil split for investors to between 20 to 25
\npercent, and to between 35 to 40 percent for gas.<\/p>\n
Iin further said there were several companies who had voiced
\ntheir interest in four other oil and gas concessions, consisting
\nof two new concessions and two concessions unsold from last year.<\/p>\n
\"They (investors) came to us and said they were interested in
\nthe four blocks. If the tender for the four concessions is
\nsuccessful, we can hope to sign contracts on a total of 12
\nconcessions this year.\"<\/p>\n
The oil and gas sector has been the main source of income for
\nthe government over the past three decades.<\/p>\n
Last year, the sector contributed 29 percent of the
\ngovernment's income and absorbed about 40 percent of total
\ninvestment spending in the country.<\/p>",
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