Oil companies to spend $6.3b on exploration and production

JAKARTA (JP): Oil and gas contractors will raise their exploration and production budgets 40 percent to US$6.3 billion this year, state-owned oil and gas company Pertamina said yesterday.

Pertamina exploration and production director Priyambodo Mulyosudirdjo said the considerable rise in expenditures indicated that the country was still an attractive investment for oil and gas contractors.

"Oil and gas contractors say Indonesia remains very attractive for long-term investment to them despite the current economic crisis, which they believe is only temporary in nature," Priyambodo said at a media conference on the outlook of the country's oil and gas industry.

Officials who attended the conference included the head of Pertamina's foreign oil contractors directorate, Gatot Karyoso, and company spokesman Ramli Djaafar.

Priyambodo believed the oil and gas contractors would spend more than their $6.3 billion planned budget this year since their expenditures exceeded planned budgets in previous years.

"In 1997, the contractors' actual expenditures for oil and gas exploration and production stood at $4.5 billion, compared with the proposed budget of $3.9 billion," Priyambodo said.

Priyambodo said the country's output could continue to maintain the 1997 crude oil and condensate production level of 1.58 million barrels per day, including 1.456 million barrels of oil per day.

Indonesia has been awarded a crude oil production quota of 1.456 million barrels per day by the Organization of Petroleum Exporting Countries (OPEC).

Gatot said contractors had allocated $1.5 billion for oil and gas exploration, up from $900 million last year.

"This will be the largest exploration budget ever over the past 30 years," Gatot said, adding that the number of exploration wells would rise to 206 this year, up from 103 last year.

Gatot said contractors had been earlier committed to spend an average of $4 billion per year for oil and gas exploration and production until 2000.

He said if crude oil prices remained between $17 and $18 per barrel, such an investment would generate between $14.5 billion and $15 billion in yearly revenues, between 62 percent and 64 percent -- or between $9.2 billion and $.9.5 billion -- of which would go to the government in royalties and fees.

Priyambodo said the government had awarded 29 oil and gas contracts to local and foreign investors last year -- which was a 30-year record -- and was expected to sign dozens of contracts this year.

"Investors are attracted to the fact that the success ratio in finding oil and gas in the country is quite high," he said, adding that of the 102 exploratory wells drilled last year, 49 wells contained oil or gas.

He said Pertamina had recently concluded negotiations for seven areas: Sareba, in and offshore from Irian Jaya; Simenggaris, offshore from East Kalimantan; Pasiriaman in South Sumatra; Kapoposang, offshore from Sulawesi; Ganal, offshore from East Kalimantan; Bukat, offshore from East Kalimantan; and South Sokang, offshore from East Natuna.

"We'll sign the contracts soon since most of have been approved by the President (Soeharto)," Priyambodo said.

Pertamina is negotiating with contractors over eight contract areas, including four in Irian Jaya, and will soon negotiate over another four contract areas.

Priyambodo said Pertamina was offering eight areas, including two off of South Sulawesi and one off of and in Irian Jaya, for direct negotiations for production sharing contractors this year.

Nine other areas, including four offshore from Irian Jaya, are open for tender, he added. (jsk)