Santos, ConocoPhillips bid for new oil and gas blocks

Leony Aurora, The Jakarta Post, Jakarta

Twenty-three companies, including major global players like Australia's Santos and U.S. companies ConocoPhillips and Anadarko Petroleum Company, have submitted bids for 11 oil and gas blocks currently on offer, an official says.

Ministry of Energy and Mineral Resources' Director of Exploration and Production Novian M. Thaib said Thailand's PTT Exploration & Production Pcl, the country's second-largest gas producer, and Indonesia's second biggest publicly listed oil and gas company PT Energi Mega Persada, are also bidding for the blocks.

"We will evaluate (the bids) and announce the winners early next month," said Novian.

The government put forth 13 blocks through direct offering -- meaning that the areas were proposed by investors -- in early June. Three acreages attracted several bids, namely Citarum in West Java, West Kampar in Riau and Bungamas in South Sumatra, said Novian.

Two other blocks, the North East Madura V in East Java and Amborip V in the Arafura Sea, failed to get any bids, despite incentives being offered, such as a bigger share of 35 percent for contractors proposed for the high-risk deep sea area.

Aside from the 13 blocks, the government has put on offer 14 other oil and gas blocks through regular tender in the first round of offering. The second round, with another 28 blocks on sale, is expected to take place in October.

To attract more investors, the government has scraped value- added tax and import duty on all capital goods to be used during exploration and exploitation periods.

It has also lowered its share of the oil output to between 65 percent and 80 percent from around 85 percent applied in previous contracts, giving a bigger piece of the pie to the winning bidders.

Indonesia is in dire need of new oil findings amid steadily declining output due to aging fields. The country's crude oil and condensate production currently stands at about 1.056 million barrels per day (bpd), lower than the target of 1.125 million bpd assumed by the government.

Rocketing global oil prices and rising domestic demand are expected to nearly double the cost of the fuel subsidy to an estimated Rp 138 trillion ($14 billion) from the Rp 76.5 trillion allocated in the state budget.