Malaysian investor wins Palmerah oil concession

Malaysian investor wins Palmerah oil concession

The Jakarta Post, Jakarta

Malaysian oil contractor Tately & NV won on Friday the tender for
the onshore Palmerah oil and gas concession in South Sumatra,
outbidding its strongest rival, Indonesia's state-owned oil and
gas company PT Pertamina.

"The main basis for picking this company (Tately) as the
winning bidder is its investment commitment in the first year of
exploration," said Indrayana Chaidir, director for exploration
and production at the Directorate General of Oil and Gas. He did
not provide details.

The Palmerah block is one of seven new oil and gas blocks
awarded to investors by the government on Friday. The government
initially offered eight blocks, but one block, the Anambas block
in West Natuna, was not awarded as the only interested bidder,
Genting Oil and Gas from Malaysia, did not submit its bid by the
deadline.

The Palmerah block attracted the strongest interest among
investors because it is seen as the most lucrative for
exploration, particularly as the neighboring blocks have already
proven to have huge oil reserves. United States-based
ConocoPhillips is reported to have also bid for the block.

Pertamina has been lobbying the government to be given special
treatment to allow the state firm to acquire the block. But
government officials have told Pertamina that since the enactment
of the new oil and gas law, the company would no longer get
preferential treatment from the government.

Pertamina, which was converted into a limited liability
company in September, has long been pampered by the government
with oil and gas acreages and other facilities.

Meanwhile, Indrayana said that the government had obtained an
investment commitment of some US$173.55 million during the
exploration period from the investors that won the seven new oil
and gas blocks. The investors are mostly local companies.

With the newly awarded contracts, the government has parceled
out a total of 17 oil and gas acreages this year compared to last
year when only one oil and gas concession was awarded.

Earlier this year, the government awarded 9 oil and gas
concessions worth US$170 million.

This will help lift the country's oil and gas output, which
has been in the doldrums for some time due to declining
investment.

Indonesia, the only member of the Organization of Petroleum
Exporting Countries (OPEC) in the Southeast Asian region,
currently produces 1.1 million barrels of oil per day (bpd),
lower than its quota of 1.317 million bpd set by the
organization..

The government expects that the country's oil output will
increase by between 100,000 bpd and 150,000 bpd next year as 14
new oil and gas blocks are expected to start production.

Seven new oil, gas contracts

Blocks Contractors

1. Asmat Block (Papua) -- PT Indonesia Papua Petroleum

2. Bontang Block (E. Kalimantan) -- PT Exindo Petroleum Tabuhan

3. Biliton Block (Java Sea) -- PT Mitra Archipelago Investment

4. Halmahera Block PT Trivicindo International

5. West Salawati Bloc (West Papua) -- Pacific East Asia Resources (S'pore)

6. Bangkanai Block (E. Kalimantan) -- PT Elnusa

7. Palmerah Block (S. Sumatra) -- Tately & NV