Six oil and gas production sharing contracts awarded

Six oil and gas production sharing contracts awarded

JAKARTA (JP): The Ministry of Mines and Energy awarded
yesterday six production sharing contracts to foreign and local
investors to develop the country's oil and gas reserves.

The contracts were awarded to Unocal Corp. of the United
States in a joint venture with PT Nusamba Energy Pratama, Japan
Petroleum Exploration Co., Eurafrep Energy BV, Genindo Western
Petroleum of Australia, Shell Prospecting South Asia BV of the
Netherlands and local company Golden Spike South Sumatra Ltd.

The contracts are the first oil and gas contracts to be
awarded by the government this year. Indonesia awarded a record
29 oil and gas contracts last year.

Minister of Mines and Energy I.B. Sudjana said the large
number of contracts demonstrated a continuing interest by foreign
investors in the country's oil and gas sector despite the
economic crisis.

"(The country's) potential oil and gas reserves, the national
stability and the contractual terms (offered by the country) are
attractive to investors," Sudjana said.

The director of exploration and production for the state oil
and gas company Pertamina, Priyambodo Mulyosudirdjo, said the
companies have committed to invest a total US$223.2 million for a
10 year period of exploration.

Unocal Corp. and Nusamba will explore 5,050 square kilometers
(sq km) of the Ganal block offshore of East Kalimantan.

Unocal holds a 90 percent stake in the block, while Nusamba
controls 10 percent. They have committed to invest $37 million
over the 10 year period.

Japan Petroleum will explore the 10,280 sq km Kapoposing block
offshore of South Sulawesi in a joint venture with Teikoku Oil
Co. and Taiyo Oil Co., both of Japan. The joint venture has
committed to invest $31 million.

Eurafrep will explore the 4,290 sq km Sareba block onshore and
offshore of Irian Jaya.

Eurafrep's investment commitment was unavailable.

Genindo, which is controlled by City View of Australia, will
explore 2,728 sq km of the Simenggaris block offshore of East
Kalimantan. Genindo has committed to invest $64 million.

Shell Prospecting, a subsidiary of Royal Dutch/Shell, will
explore 6,250 sq km of the Bukat block offshore of East
Kalimantan. Shell will invest $48 million.

Golden Spike will explore the onshore Pasiriaman block
measuring 2,280 sq km in South Sumatra. The company will spend
$24 million for its exploration activities.

Priyambodo said the contracts allowed the companies to operate
their area for 30 years after commercial production was
established.

Under the contracts, the companies must give the government
between 75 percent and 85 percent of their oil output and 70
percent of their gas output in royalties and tax.

Priyambodo said the six investors must pay Pertamina a total
of $1.8 million in compensation for the information provided by
the state company.

The contractors also must provide Pertamina a total of
$850,000 for equipment and service expenses, $425,000 for an
education fund and a certain percentage for a production bonus.

Priyambodo has previously said Pertamina expected at least 19
oil and gas contracts to be signed this year.

He said Pertamina has already negotiated one contract yet to
be approved by the ministry and was currently negotiating eight
contracts with four more soon to come. (jsk)