Govt to open oil block tenders next month
Govt to open oil block tenders next month
JAKARTA (JP): The government plans to open the tender process
for 23 new oil blocks next month, marking the government's first
attempt in years to tender oil blocks, after it took over the
task from state-owned oil and gas company Pertamina.
The new oil blocks include the much contested Makassar Straits
deep sea blocks, which promise giant oil and gas reserves,
according to Minister of Energy and Mineral Resources Purnomo
Yusgiantoro.
"We will start the tender process gradually with nine blocks
on March 1," Purnomo told reporters following a gathering with
the country's oil and gas community.
Among the first batch are the six Makassar Straits blocks
located offshore East Kalimantan.
Besides their huge oil and gas potentials, the six blocks will
also become one of Indonesia's first deep sea oil projects.
The other three blocks are the Bawean I and II blocks located
in the East Java Sea, and the Nila block in the West Natuna Sea.
A press statement from the ministry said that bid invitations
would be sent on March 1, with June being the closing date for
the submission of bids.
Interested parties can send their bids online by contacting
www.INDIGO.pool.com, and request further information at
www.migas.dpe.go.id.
The government will evaluate bids according to their cost
competitiveness in operating the block as well as companies'
investment commitments.
A winning bid is subject to presidential approval, and must
afterwards sign a Production Sharing Contract with Pertamina.
Purnomo said the ministry could announce the tender results as
early as July.
The government, he said, took over the tender process from
Pertamina after the company complained that it had to spend
around $10 million each year on the process.
But in conducting its tender procedures, the government would
work together with Pertamina in a joint team, he said.
Although Pertamina officials were part of the tender team, he
did not rule out the possibility of the state company
participating in the tender.
Pertamina has expressed its interest in operating one of the
six Makassar Straits oil blocks due to their vast potential.
But according to Purnomo, Pertamina is unlikely to operate any
of these six blocks alone, and will need to form a joint venture.
"My feeling tells me that no company will enter (the tender)
alone," he said.
He stressed that each of the six Makassar Straits blocks
required contractors to invest US$200 million for exploration
alone.
Although early indications showed that the oil blocks offered
for tender are rich in oil and gas reserves, more exploration was
needed to ascertain the exact reserves, he said.
Purnomo estimated that the six oil blocks would be developed
by a consortium of four to five oil and gas companies.
Under a consortium arrangement, he said, Pertamina might only
own a 20 to 25 percent stake.
He added that the existing oil and gas laws gave Pertamina the
right to directly own a 10 percent stake in any oil block without
going through a tender process.
"At the exploration stage, Pertamina could enter with a 15
percent stake, but at the production stage it could raise its
stake to 25 percent," he explained.
Other companies likely to join the tender are American oil and
gas companies Unocal Indonesia, and Conoco Inc., Canada's Gulf
Resources, France's Total Indonesie, and Britain's Premier Oil
and Beyond Petroleum (BP), Purnomo said.
Among the new companies wanting to join the tender, he added,
was the German based technology and telecommunications firm
Siemens.
"Siemens visited me the other day, and I thought they wanted
to discuss Paiton II," he said referring to the Paiton II power
plant in East Java, in which Siemens Project Ventures GmbH had a
50 percent stake.(bkm)