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)