More incentives needed to promote oil industry
More incentives needed to promote oil industry
JAKARTA (JP): The government should increase incentives for
oil explorers in eastern Indonesia, former minister of mines and
energy Subroto said yesterday.
"The current incentives are apparently not enough to encourage
oil investors to explore for oil in frontier areas," he said.
Subroto, who is also the former secretary general of the
Organization of Petroleum Exporting Countries (OPEC), was
speaking after addressing a luncheon on The Energy Outlook in the
Asia Pacific Region which was organized by the Indonesian
Executive Circle.
He said many oil investors preferred to explore in countries
like Vietnam, Mongolia and other central Asian nations.
"I don't think they do it only because of geological
conditions which makes exploration cheaper. It has to do with a
better investment climate," he said.
Subroto said eastern Indonesia had a reserve of about 60
billion barrels but not many investors wanted to explore there
because there were not enough incentives.
The Indonesian government, through the state oil and gas
company Pertamina, offers a production sharing scheme of 65:35 in
frontier areas -- mostly in eastern Indonesia -- compared to the
normal 85:15 split in other areas. The splits are in Pertamina's
favor.
Pertamina is also offering case-by-case incentives to oil
contractors in remote areas.
Subroto urged the government to improve bureaucratic
procedures in the energy business.
Asia Pacific
Subroto said that according to the British Petroleum
Statistical Review of World Energy in June 1995, Asia Pacific oil
consumption would increase over the next several years.
In 1998, oil consumption will reach 21.3 million barrels a
day.
By 2000, consumption is projected to reach 23.5 million
barrels a day.
But Subroto said Asia Pacific crude oil production was
unlikely to increase sharply.
"Only China and Vietnam are projected to significantly
increase their oil production, judging from their current
exploration and development activities," he said.
"As a result, crude oil production in the region will not
increase very much from the present production of 6.76 million
barrels a day," he said.
In 2000, Asia Pacific oil production is estimated to remain at
6.7 million barrels a day, while consumption will increase to
23.5 million barrels a day, implying 16.8 million barrels a day
will need to be imported, he said.
He said the logical oil supply for this region would be the
Middle East where production capacity had to be increased. This
relationship would strengthen economic links between the two
regions.
"Asian countries will be more and more involved in the
financial and technical requirements of developing Middle East
production capacity, while the Middle East oil producing
countries will enhance their interest in being active in
the downstream development of Asia," he said. (bnt)