Government mulls 'rewards' for unexploited oil, gas fields
Government mulls 'rewards' for unexploited oil, gas fields
JAKARTA (JP): The government is considering offering
incentives to encourage production of oil and gas fields with
small proven reserves, Minister of Mines and Energy Kuntoro
Mangkusubroto said on Friday.
"There are many marginal oil and gas fields left unexploited;
maybe because our policies, (including) our tax policies, aren't
conducive enough," Kuntoro said at a weekly media conference.
He said the government would hold a seminar in February next
year to get feedback from the industry concerning the incentives
as it expected to formulate an incentive package by mid-1999.
Incentives for marginal fields have long been called for by
the oil and gas industry as a means to increase the country's oil
output.
Leon Codron, president and resident manager of Atlantic
Richfield Indonesia Inc. (ARII), a subsidiary of the United
States' Atlantic Richfield Co. (ARCO), said on Thursday that some
half a billion barrels of known oil reserves in Indonesia were
sitting in fields currently too small for viable development.
"Economic incentives in the form of interest-cost recovery on
unrecovered capital, investment credits and domestic market
holidays on oil are needed to make investment in these identified
oil sources more attractive," Codron said at a discussion during
the two-day Indonesia Forum international seminar.
State oil and gas company Pertamina has launched several
incentive packages since the early 1990s to encourage oil and gas
exploration in frontier areas and deep-water areas, particularly
in eastern Indonesia, and the use of tertiary enhanced oil
recovery (EOR) technology.
Under the packages, the government reduces its share in the
contractors' oil output to between 65 percent and 75 percent from
85 percent for conventional areas, and cuts its share of their
gas output to between 55 percent and 65 percent from 70 percent
for conventional areas.
But Pertamina has not yet introduced any incentives for the
exploitation of marginal fields.
Analysts believe Pertamina is reluctant to launch the
incentives out of fear that the incentives would reduce the
government's earnings from the fields. (jsk)