Government to tender nine new oil, gas fields

Government to tender nine new oil, gas fields

Fitri Wulandari, The Jakarta Post, Jakarta

The government was planning to offer nine new oil and gas
field concessions to investors in October this year, the Ministry
of Energy and Mineral Resources said Sunday.

Ministry oil and gas director general Iin Arifin Tachyan said
the fields were located in Papua, East Kalimantan, South
Sulawesi, Natuna Island and offshore Java.

"The tender of the new nine oil and gas fields is expected to
take place in October, after we secure contracts from the
previous round of tenders," Iin told The Jakarta Post.

The government earlier this year offered 11 oil and gas field
concessions.

Iin said the tenders would be closed at the end of July and
the winners announced in August.

Iin also said the government was studying the possibility of
providing incentives to investors by increasing the production
split "so that they invest more in the sector."

He did not elaborate.

Under existing production-sharing contracts, investors are
entitled to take 15 percent of their oil output and 30 percent of
their gas output. The remainder goes to the government.

Iin said that in the earlier offering, the government had
already increased the oil split for investors to between 20
percent to 25 percent, and to 35 percent for gas.

The oil and gas sector has been the main source of income for
the government for the past 30 years.

Last year, 29 percent of the government's income came from
this sector, where investors between US$5 billion and $6 billion
on exploration and production activities, or about 40 percent of
total investment in the country during that period.

However, due to various uncertainties at home and overseas,
investment in the oil and gas sector has started to decline. The
government only signed two new contracts last year.

Industry experts have said that though Indonesia is rich in
hydrocarbon deposits, it is still an unattractive investment due
to its many problems.

They said the country should create a clear legal framework
and fiscal environment, respect contracts and provide better
contractual terms to attract new investment in the increasingly
competitive global oil and gas industry.