Govt awards eight contracts in the oil and gas sector
JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana awarded yesterday seven production sharing contracts (PSC) to foreign and local companies to explore for oil and gas in the country.
The minister also awarded one technical assistance contract (TAC) to a local contractor to operate one of Pertamina's old oil wells.
Sudjana said the signing of the eight contracts took the total number of contracts signed by the government this year to 29 -- a new record -- and showed that investors were still keen to invest in the country's upstream oil sector.
"This also refutes the allegation that investors have lost confidence in Indonesia's business climate," the minister said.
The PSCs were awarded to the Korea Petroleum Development Corp. (PEDCO) of South Korea to hunt for oil in the Wokam Block contract area off Irian Jaya; Talisman (Madura) Ltd, a subsidiary of Talisman Energy Inc. of Canada to explore for oil in the Madura Block off the island of Madura; Santos (Sampang) Pty. Ltd, a subsidiary of Australia's Santos Petroleum, to hunt condensate in the Sampang Block, also off Madura.
Other PSC recipients are Apex (Bengara II) Ltd which is to explore the Bengara II Block in and off the shore of East Kalimantan; the consortium of Nusamba Kaltim Pratama and Unocal Rapak Ltd which will explore the Rapak Block off East Kalimantan.
The final two PSC recipients are Britain's Kondur Petroleum S.A which got the Selat Malaka Block in the Straits of Malacca and Union Texas Tomori Inc. of the U.S., which was awarded the Toili Block in and off the shore of Central Sulawesi.
The TAC contract was awarded to a consortium of PT Pancacitra Multi Jaya and PT Energitama Abdi Nusa to develop the Ibul Tenggara field in South Sumatra.
Investment
Pertamina exploration and production director Priyambodo Mulyosudirjo said the PSC contractors would have concessions over their contract areas for 30 years, compared with the TAC contractor's concession period of 20 years.
He said PSC contractors had committed to invest US$258.64 million in exploration and development over the first ten years.
The contractors had to pay Pertamina $5.45 million in compensation for the information provided by Pertamina, another $1.8 million for equipment and services, and $1.01 million to an education fund.
The contractors also have to give Pertamina the so-called production bonus at an amount relative to their production volume.
"The bonus as well as the funds are not counted as operating costs," said Priyambodo.
The contractors should also allocate a portion of their output for the country's oil refineries, he said.
According to Priyambodo, the contractual terms set by Pertamina were acceptable to investors as indicated by the large number of contracts signed this year.
He projected at least 20 contracts would be signed next year.
Sudjana said factors which boosted investment in the country's oil and gas sector included the increase in the world's oil and gas demand, the stability of oil prices, and Indonesia's large oil and gas resources, and the country's large market potential.
He said the country was expected to become a net oil importer in the next decade, but he believed Indonesia could maintain its position as a net oil exporter for longer than predicted since much of the eastern part of Indonesia remained unexplored. (jsk)