Pertamina signs 7 oil contracts with private firms
JAKARTA (JP) The state-owned oil company Pertamina signed five production-sharing contracts yesterday for oil and gas exploration and production with foreign companies and technical assistance contracts with two domestic firms.
Out of the five production-sharing contracts, two were signed for the extension of the exploration and production rights of Santa Fe Energy Resources of the United States and Asamera Overseas Ltd, a subsidiary of Gulf Canada Resources.
"The two contracts are extended for another 20 years, from the year 2000 to 2020 for Santa Fe in Irian Jaya province and from 2003 to 2023 for Asamera in South Sumatra," Minister of Mines and Energy I.B. Sudjana told the press after witnessing the signing of the contracts.
The extended contracts require Santa Fe, which is in partnership with Coparex, Ciegco Vogelkop INC and Mitsui Oil Exploration Co. Ltd, to spend at least US$10.2 million for the first five years and Asamera to spend $65 million for the first nine years for exploration activities.
The three new contracts were awarded to Eurafrep Resources BV of the Netherlands for exploration at an onshore block in Central Java; to Canadian Petroleum Indonesia Ltd. at an offshore block in Maluku; and to Chevron Sibolga Ltd. and Texaco Exploration Sibolga of the United States at an offshore block in Sibolga, North Sumatra.
The three new contractors are required to spend at least $27 million, $42.8 million and $22.75 million respectively during the first 10 years of exploration activities.
In May, Pertamina signed two production-sharing contracts with foreign companies: a joint venture of Overseas Petroleum and Investment Co. (a subsidiary of Taiwan's state-owned company China Petroleum Corporation) with Treasure Bay Enterprises, and a joint venture of Premier Oil Pangkah Ltd with Seafield Resources and Amerada Hess.
According to the minister, Pertamina is likely to sign a number of oil contracts with foreign companies later this year. "There are at least six contracts under consideration," he noted.
Pertamina's data shows that Indonesia now has 59 production- sharing contracts with foreign companies.
Incentives
The technical assistance contracts signed yesterday were awarded to two domestic companies, PT Pilona Petro Tanjung Lontar and PT Garis Astatunggal Bangkudulis.
Speaking at the signing ceremony, Sudjana said Indonesia has no intention of issuing new incentives because the country is still attractive for foreign oil investors.
"Foreign investors are still very interested in exploring for oil and gas reserves in Indonesia, which has offered adequate incentives. I'm optimistic that the attractiveness will continue in the future," he said.
Existing incentives are given to investors exploring for oil and gas reserves at frontier areas, mostly in the eastern part of the country, where they can receive 35 percent of their oil production, as compared to only 20 percent elsewhere.
Besides, the minister said, oil prices are currently high, reaching $22 per barrel on the world market, which will certainly encourage investors to enhance their exploration activities in Indonesia.
He expected that oil prices would continue to strengthen until the end of this year because demand for the energy resource is increasing due to the winter season in the northern hemisphere.
"Members of the Organization of Petroleum Exporting Countries (OPEC), including Indonesia, are also strongly committed to complying with the organization's quota agreement," he said.
OPEC's total production ceiling is set at 25.033 million barrels per day.
Sudjana also said that oil supply from the North Sea is expected to decrease, which is likely to affect the world's oil market.
Recently, Pertamina asked the government to approve the tax consolidation as a new incentive to attract oil investors to engage in exploration in frontier areas. But seemingly, such an incentive is unlikely to be granted in the near future because it is feared it will affect the country's tax revenue.
Under the proposed tax consolidation, investors' losses from exploration in frontier areas should be deductible from their taxable profits of other oil fields they operate in the country. (13)
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