Pertamina signs 7 oil contracts with private firms<\/p>\n
JAKARTA (JP) The state-owned oil company Pertamina signed
\nfive production-sharing contracts yesterday for oil and gas
\nexploration and production with foreign companies and technical
\nassistance contracts with two domestic firms.<\/p>\n
Out of the five production-sharing contracts, two were signed
\nfor the extension of the exploration and production rights of
\nSanta Fe Energy Resources of the United States and Asamera
\nOverseas Ltd, a subsidiary of Gulf Canada Resources.<\/p>\n
\"The two contracts are extended for another 20 years, from the
\nyear 2000 to 2020 for Santa Fe in Irian Jaya province and from
\n2003 to 2023 for Asamera in South Sumatra,\" Minister of Mines and
\nEnergy I.B. Sudjana told the press after witnessing the signing
\nof the contracts.<\/p>\n
The extended contracts require Santa Fe, which is in
\npartnership with Coparex, Ciegco Vogelkop INC and Mitsui Oil
\nExploration Co. Ltd, to spend at least US$10.2 million for the
\nfirst five years and Asamera to spend $65 million for the first
\nnine years for exploration activities.<\/p>\n
The three new contracts were awarded to Eurafrep Resources BV
\nof the Netherlands for exploration at an onshore block in Central
\nJava; to Canadian Petroleum Indonesia Ltd. at an offshore block
\nin Maluku; and to Chevron Sibolga Ltd. and Texaco Exploration
\nSibolga of the United States at an offshore block in Sibolga,
\nNorth Sumatra.<\/p>\n
The three new contractors are required to spend at least $27
\nmillion, $42.8 million and $22.75 million respectively during the
\nfirst 10 years of exploration activities.<\/p>\n
In May, Pertamina signed two production-sharing contracts with
\nforeign companies: a joint venture of Overseas Petroleum and
\nInvestment Co. (a subsidiary of Taiwan's state-owned company
\nChina Petroleum Corporation) with Treasure Bay Enterprises, and a
\njoint venture of Premier Oil Pangkah Ltd with Seafield Resources
\nand Amerada Hess.<\/p>\n
According to the minister, Pertamina is likely to sign a
\nnumber of oil contracts with foreign companies later this year.
\n\"There are at least six contracts under consideration,\" he noted.<\/p>\n
Pertamina's data shows that Indonesia now has 59 production-
\nsharing contracts with foreign companies.<\/p>\n
Incentives<\/p>\n
The technical assistance contracts signed yesterday were
\nawarded to two domestic companies, PT Pilona Petro Tanjung Lontar
\nand PT Garis Astatunggal Bangkudulis.<\/p>\n
Speaking at the signing ceremony, Sudjana said Indonesia has
\nno intention of issuing new incentives because the country is
\nstill attractive for foreign oil investors.<\/p>\n
\"Foreign investors are still very interested in exploring for
\noil and gas reserves in Indonesia, which has offered adequate
\nincentives. I'm optimistic that the attractiveness will continue
\nin the future,\" he said.<\/p>\n
Existing incentives are given to investors exploring for oil
\nand gas reserves at frontier areas, mostly in the eastern part of
\nthe country, where they can receive 35 percent of their oil
\nproduction, as compared to only 20 percent elsewhere.<\/p>\n
Besides, the minister said, oil prices are currently high,
\nreaching $22 per barrel on the world market, which will certainly
\nencourage investors to enhance their exploration activities in
\nIndonesia.<\/p>\n
He expected that oil prices would continue to strengthen until
\nthe end of this year because demand for the energy resource is
\nincreasing due to the winter season in the northern hemisphere.<\/p>\n
\"Members of the Organization of Petroleum Exporting Countries
\n(OPEC), including Indonesia, are also strongly committed to
\ncomplying with the organization's quota agreement,\" he said.<\/p>\n
OPEC's total production ceiling is set at 25.033 million
\nbarrels per day.<\/p>\n
Sudjana also said that oil supply from the North Sea is
\nexpected to decrease, which is likely to affect the world's oil
\nmarket.<\/p>\n
Recently, Pertamina asked the government to approve the tax
\nconsolidation as a new incentive to attract oil investors to
\nengage in exploration in frontier areas. But seemingly, such an
\nincentive is unlikely to be granted in the near future because it
\nis feared it will affect the country's tax revenue.<\/p>\n
Under the proposed tax consolidation, investors' losses from
\nexploration in frontier areas should be deductible from their
\ntaxable profits of other oil fields they operate in the country.
\n(13)<\/p>\n
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