Government to sign new oil and gas deals worth billions of dollars
The Jakarta Post, Jakarta
The government will sign 46 new oil and gas contracts worth more than US$4.2 billion -- to be witnessed by President Bambang Yudhoyono -- as part of the effort to boost dwindling oil output and secure gas supplies for the domestic market.
The contracts will include 15 new deals covering prospecting, and the managing of oil and natural gas blocks across the nation, and 18 deals for the sale of natural gas and liquefied petroleum gas (LPG) on the domestic market, said Iin Arifin Takhyan, director general for oil and gas at the Ministry of Energy and Mineral Resources, on Friday.
PT Medco Energi Internasional; Petronas Carigali, a unit of Malaysia's Petronas; Anadarko Petroleum Corp. (APC) of the U.S.; Portugal's Altar Sociedade de Investimento Mobiliario S.A. and Inparol Pte. Ltd. are among the 15 companies that were awarded blocks.
"In the first three years alone, these companies are expected to invest about $190 million on prospecting," Iin said, adding that the blocks were among a total of 21 oil and gas blocks the government had put on offer earlier this year.
Investment the country's oil and gas sector fell by more than half in 2003 as existing companies reduced prospecting activities while new ones steered clear of Indonesia.
With oil output in the country declining sharply, exacerbated by aging facilities, the government has been forced to seek fresh reserves by inviting investors.
Last year, 16 new oil and gas blocks were parceled out.
As of the end of September, the country's oil production stood at 966,465 barrels a day of crude, below the 1.2 million quota set for Indonesia by the Organization of Petroleum Exporting Countries (OPEC).
Iin also said that the government plans to offer 10 new oil and gas blocks next year through tenders.
Meanwhile, the government will sign 18 contracts worth $4.02 billion for the sale of natural gas and LPG on the domestic market.
Bloomberg quoted Trijana Kartoatmodjo, an operations deputy at the Oil and Gas Regulatory Body (BP Migas), as saying that the agreements would be with gas producers such as Amerada Hess Corp., China National Oil Corp., ConocoPhillips and PetroChina Co.
State power utility PT Perusahaan Listrik Negara (PLN) will buy 100 million cubic feet a day from Amerada-Hess at $2.55 per million British thermal units for 15 years from 2006, Trijana said. The natural gas will distributed to the Gresik gas-fired power plant in East Java.
Amerada-Hess will supply the gas from its Pangkah field off East Java.
PLN will also get 90 million cubic feet of gas a day at $2.67 per million BTU for 15 years starting in 2005 from China National Overseas Oil Corporation.
The gas will come from CNOOC's southeast Sumatra field and will power PLN's Cilegon plant in West Java.
State gas distributor PT Perusahaan Gas Negara (PGN) will also sign a contract under which ConocoPhillips will supply it with 50 million cubic feet of gas per day.