As the government seeks to lift investment in exploration to counter slowing oil and gas output, it offered 20 blocks on Friday in the nation's first round of tenders this year, a senior official at the Energy Ministry said.
Twelve of the blocks are in Eastern Indonesia, including Semai IV and the Northeast Madura field, Evita Legowo, director general of oil and gas, said at the Indonesian Petroleum Association's 35th Oil and Gas Convention and Conference in Jakarta.
At the event, drilling rights were granted to Eni Indonesia for the Arguni I block and to Total E&P for Southwest Bird's Head block, both in West Papua, as the final round of last year's tenders was concluded. Pan Orient Energy Holding also won rights to East Jabung block in South Sumatra, according to Antara. Evita said the companies had agreed to invest $113.7 million over the next three years exploring the blocks.
Evita earlier said that the government would give contractors a bigger cut of the proceeds if they explored difficult fields, such as those in Eastern Indonesia. "We will offer 25 percent profit sharing for the contractor, and it could even be bigger," she said on Thursday.
The current production split gives contractors 15 percent of the profit with the rest government pocketing the rest. Exploration costs are also reimbursable through cost recovery.
Ron Aston, the chairman of the IPA said on Thursday that Indonesia needed to boost investment in oil and gas exploration to $23 billion by 2020 from $18.9 billion last year because it would be difficult to secure domestic supply as production declines.
Other attendees of the conference, including Philip Whittaker, a principal from Boston Consulting Group, and Vasta C. Choesin, public relations manager of Exxon Mobil Indonesia, added that on top of investment the nation must also have clear and consistent regulation to maintain a steady flow of capital to the sector.
Southeast Asia's largest crude producer is trying to draw funding for the energy sector to help stem the decline in output at aging oil fields, which led to the country withdrawing from the Organization of Petroleum Exporting Countries in 2008, as well as a slump in gas production.
Local oil producers cannot fulfil domestic demand or around 1.5 million barrels per day, meeting only 63 percent of the need, while imports cover the gap.
The government has set an ambitious target to ramp up output to 1.2 million bpd by 2014, despite missing its target last year of 965,000 bpd. This year's goal is 970,000 bpd, despite industry watchers' doubts.
The state is encouraging companies to unlock the energy potential of Eastern Indonesia. Raden Priyono, chairman of upstream oil and gas regulator BPMigas, said on Thursday that there were 18 blocks throughout the archipelago, mostly offshore, that have yet to be explored. (JG & Agencies)