Investment in oil, gas sector decline, says official

Moch. N. Kurniawan, The Jakarta Post, Jakarta

State oil and gas company Pertamina said on Tuesday that many oil companies had shelved their investment plans in the country during the first nine months of this year due particularly to increasing security problems and legal uncertainty.

"These problems are challenging for all of us ...," Effendi Situmorang, Pertamina's management production sharing director told a press conference.

He said that fresh investment in the oil and gas sector reached US$1.64 billion between January and September, far from the government's 2001 full year target of $5.4 billion.

He explained that investment in production reached $1.06 billion, in development $300 million, administration $186 million and exploration $93 million.

Security disturbances have soared in the country following the downfall of former authoritarian president Soeharto in 1998, and the implementation of Law No. 22/1999 on regional autonomy and Law No. 25/1999 on fiscal balance between the central and regional governments.

Meanwhile, the government ruling which bans prospecting in protected forests has triggered legal uncertainty in the oil and gas sector.

The change of status of certain concession areas into a protected forests has forced oil and gas companies to abandon their activities even though they had obtained the necessary licenses to exploit the sites prior to their changes in status.

Effendi cited Conoco Indonesia Inc., as an example, with the company having to postpone its exploration in the Lorentz conservation forest in Irian Jaya after the concession area was listed as a world heritage site, even though the company had already invested about $200 million.

Elsewhere, Effendi expressed optimism that the oil production target in the 2002 state budget of 1.32 million barrels per day (bpd) could be reached.

He said that Pertamina would ask a number of oil companies to increase production levels, including PT Caltex Pacific Indonesia by 40,000 bpd.

Caltex is the largest oil contractor in the country.