Investment in oil, gas sector decline, says official
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.