Govt names 9 winners for oil and gas blocks
Leony Aurora, The Jakarta Post/Jakarta
Indonesia announced on Thursday the tender winners for nine oil and gas blocks proposed through a direct offer mechanism.
The value of the nine is US$102.5 million for the next three years on exploration activities.
U.S. energy giant ConocoPhilips won the rights to explore the Amborip VI block in the Arafura Sea while PT Energi Timur Jauh, a subsidiary of the second largest local oil company PT Energi Mega Persada, got the East Kangean block in East Java, Ministry of Energy and Mineral Resources' director of exploration and production Novian M. Thaib said.
"There were 13 blocks on offer, but only 11 attracted 23 bids from 21 companies," he told reporters. No company bid on the Northeast Madura V block in East Java or the Amborip V in the Arafura Sea, he added.
The government did not award two of the 11 blocks -- North Bali II, which received offers from Australia's Santos, and Taritip in the Makassar strait -- as the bidders did not meet the minimum requirement, Novian explained.
In the next three years, the tender winners will spend a total of $7.95 million on geological and geophysical studies, $25.85 million on two-dimensional and three-dimensional seismic surveys and $68.7 million to drill 27 exploration wells.
The government will also receive a combined signature bonus of $7.9 million upon contract signing.
PT Bumi Parahyangan Ranhill Energia Citarum won the Citarum block in West Java, which was the most popular item in the first round of tender through a direct offer -- meaning that the areas had been proposed earlier by investors.
The government awarded the only producing block offered, which is Wailawi in East Kalimantan, to local government-owned enterprise Benuo Taka. The company will work based on a cost-and- fee contract, where it will get a fee of $5 for each barrel produced and 25 U.S. cents for every million British thermal units of gas.
Along with the 13 direct offer blocks, the government also put on offer 14 other oil and gas blocks through regular tender in June.
"We will open the second round of direct offer tender in late September with between 15 and 20 blocks," said Novian.
The second round of offering through regular tender is expected to take place in October.
Indonesia is in dire need of new oil discoveries amid steadily declining output due to its many aging fields. The country's crude oil and condensate production currently stands at about 1.056 million barrel per day (bpd), lower than the target of 1.125 million bpd set by the government.
To attract more investors, the government has scraped value- added taxes and import duties for all capital goods during exploration and exploitation periods.
It also lowers its share of the oil output to between 65 percent and 80 percent from around 85 percent applied in previous contracts, giving a bigger slice of the oil pie to the winning bidders.