Minister Sudjana upbeat on oil investments
JAKARTA (JP): The country's oil industry looks promising despite an estimated decline in new contracts this year, Minister of Mines and Energy I.B. Sudjana said yesterday.
"Although we see less contracts this year, foreign and local investors are still interested in investing in oil exploration and production," the minister said at a signing ceremony for oil contracts.
He said the government was processing several production deals with private companies, indicating the oil sector remained attractive.
The minister said the government believed upstream-oil investment prospects were still bright and new incentives to boost investment were unnecessary.
The state oil and gas company Pertamina signed two production- sharing contracts with PT Risjad Salim Resources Asahan of Indonesia and Santa Fe Energy Resources of the United States.
Pertamina also signed four technical assistance contracts with four Indonesian firms: PT Ranya Energy, PT Western Nusantara Energy, PT Indospec Asia Petroleum Bangadua and PT Gunakarsa Glagah-Kambuna Energy.
Sudjana said Pertamina signed nine production-sharing contracts and six technical assistance contracts this year, compared to 12 production-sharing contracts and eight technical assistance contracts last year.
The country, particularly its eastern provinces, has large oil and natural gas reserves.
The minister encouraged investors to look east. He said the government would continue to improve business conditions for private investors in those frontier areas.
Sudjana, who left immediately after the ceremony without answering reporters' questions, reminded private investors that the recent negative press reports on him were untrue.
"I hope that all of you, especially the investors, can wisely sort out the stories. If necessary you can ask me for further explanations on the reports," he said.
According to the reports, the minister asked PT Tambang Batubara Bukit Asam to transfer Rp 50 billion (US$21.55 million) in government royalties to his personal bank account.
Sudjana also revoked the authority of Kuntoro Mangkusubroto -- the ministry's director general of general mining -- following two Canadian mining companies', Bre-X Minerals and Barrick, battle for the Busang gold mine in East Kalimantan.
Sudjana denied these reports: "I asked the company to transfer the funds to the ministry's bank account, not mine, to save the state's share of coal output. And the revocation of Kuntoro's authority had nothing to do with Busang gold mine. It's part of our efforts to streamline the ministry," he said.
Pertamina's director of exploration and production, Priyambodo Mulyosudirjo, said that according to the production-sharing contracts PT Risjad Salim Resources Asahan would have a 4,200- square-kilometer exploratory concession off the coast of Asahan, North Sumatra, and Santa Fe would have an 8,595-square-kilometer concession off the coast of Pagatan, South Kalimantan.
PT Risjad Salim is required to spend at least US$73.7 million on exploration in 10 years.
Santa Fe, which signed a production-sharing contract with Pertamina for exploration in Irian Jaya in October, is required to spend $25.8 million in 10 years.
The companies are also required to supply the domestic market with their oil after 60 months of production.
The technical assistance contracts were awarded by Pertamina to four local firms to explore the Bangadua field in West Java; Glagah-Kambuna in North Sumatra; Pamanukan, West Java; and Tanjung Miring in South Sumatra.
Asked why there were less oil contracts this year, Priyambdo said the oil industry fluctuated. He shared Sudjana's view that the country, particularly its eastern provinces, was promising for oil and gas investments.
"We don't think it necessary for the government to issue new incentives to accelerate oil exploration," he said.
He said Pertamina was negotiating seven oil contracts, which were expected to be signed next January. (bnt)