Indonesia offers 11 oil and gas concessions

Indonesia offers 11 oil and gas concessions

The Jakarta Post, Nusa Dua, Bali

The government is offering 11 new oil and gas concession for
investors this year, promising better contractual terms, enabling
the investors to reap larger rewards.

"The government will consider offering a more attractive
production split based on the technical and economic aspects of
the oil and gas potential," Minister of Energy and Mineral
Resources Purnomo Yusgiantoro said in a statement distributed
during the "Dialog Forum of Oil, Energy and Mining Stakeholders"
here on Saturday.

The forum, which was opened by President Megawati
Soekarnoputri, was attended by dozens of top executives from oil,
energy and mining companies and several ministers, including
Purnomo, Coordinating Minister for the Economy Dorodjatun
Kuntjoro-Jakti, Minister of Industry and Trade Rini Soewandi,
Minister of Forestry M. Prakosa and Chairman of the Investment
Coordinating Board (BKPM) Theo F. Toemion.

He did not provide details of the production split, but 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.

Purnomo said the recipients of the 11 contracts were expected
to invest a total US$160 million in exploration activities in the
first three years, which would have a real multiplier effect on
the national and regional economies.

The 11 new contract areas are located respectively in Jambi
and South Sumatra (2 contracts), off the coast of Rembang,
Central Java (1), off the coast of East Java (5), off the coast
of Bali (2) and off the coast of Tarakan island, East Kalimantan
(1).

The oil and gas sector has been the main source of income for
the government over the past three decades.

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

Several companies took an opportunity at the forum to sign
contracts.

Publicly-listed mining company PT Aneka Tambang (Antam) signed
an investment agreement with publicly listed nickel producer PT
INCO for the exploitation of nickel in East Pomalaa, Southeast
Sulawesi.

Antam's president Aditya Sumanegara signed the agreement with
his counterpart from INCO, E.W. Hodkin, in the presence of
Megawati.

Aditya said that under the agreement, INCO would provide Antam
with nickel ore supplies for the latter's ferronickel plants.

INCO is 58 percent owned by INCO Ltd of Canada, 20 percent by
Japan's Sumitomo and the rest by the public.

Purnomo hailed the signing saying, "this is a good start for
increasing investment in 2003."

He said he hoped Indonesia could retain its position as the
world's fifth-largest nickel producer following the signing of
the agreement.

Another contract signed during the forum is the one between
Antam and local cooperative Inkopintra for the supply of raw
materials for silver handicraftsmen in Bali worth Rp 500
million.

State-owned electricity company PT PLN also signed two power
purchase agreements respectively with the investors for the
building of a coal-fired power plant in Sibolga, North Sumatra,
worth $238 million and a coal-fired power plant in Amurang, North
Sulawesi, worth $134 million.

State-owned gas distribution and transmission firm PT PGN
signed a gas sales and purchase agreement with petrochemical firm
PT Chandra Asri at a contract value of $5 million per year.

PT Indonesia Power, a subsidiary of PLN, signed a contract
with Australian firm Santos Pty Ltd for the 10-year sale of gas
to the former's 766-megawatt open-and-combined-cycle power plant
in Grati, East Java, at a contract value of $36 million per year.

Santos will supply the power plant with gas from its Oyong
field off the coast of East Java.