Thu, 20 Mar 2003

TotalFinaElf may cancel RI bid due to war

A'an Suryana, The Jakarta Post, Jakarta

French oil and gas giant TotalFinaElf might not proceed with bidding for 11 oil and gas blocks being offered by the Indonesian government because of the imminent war in Iraq, a company official said.

"Our management is no longer enthusiastic to proceed further with the bidding process," Ananda Idris, spokesman of TotalFinaElf in Indonesia told The Jakarta Post on Wednesday.

"The stock values of the world's top companies have been in the doldrums, and the worst scenario might occur if war breaks out and lasts for a long time.

So, we will not ... (join in the bidding) in this turbulent situation," Ananda added.

A government official said earlier that 17 local and international companies, including TotalFinaElf and ExxonMobil, had expressed interest in bidding for the 11 oil and gas blocks.

The 11 new contract areas are located in Jambi and South Sumatra (two blocks), off the coast of Rembang in Central Java (one), off the coast of East Java (five), off the coast of Bali (two) and off the coast of Tarakan island in East Kalimantan (one).

Final bids for the 11 concessions should be accepted by the government in July, with contract signing in August.

The government is now offering investors better terms after the government managed last year only to attract one investor for 14 oil and gas blocks being tendered.

Under the new proposal, the government is offering a higher share of output to contractors.

They are now entitled to up to 25 percent of oil output and 45 percent of gas output, compared with 15 percent and 30 percent respectively under traditional production-sharing contracts.

With the tender of the 11 blocks, the government has forecast oil and gas investment to increase to US$6 billion this year, up sharply from $3.42 billion last year.

Meanwhile, Deva Rachman, a spokesperson from ExxonMobil Oil Indonesia could not confirm whether the company would proceed with the final bidding stage.

"Whether or not we finally lodge a final bid depends on the headquarters' assessment of the competitiveness of the 11 concessions, compared with other fields in the world," said Deva.