Indonesia, Asia Pacific’s sole OPEC member struggling to boost crude output, offered 27 new exploration areas on Thursday and sweetened the terms for foreign oil firms to find oil and gas in difficult fields.
“We are giving higher splits in some areas based on geological factors. We expect those areas will become attractive to investors for exploration,” Iin Arifin Takhyan, director general for oil and gas, told reporters.
The government offered 25 to 35 percent production splits for investors in 20 areas, including in offshore Natuna and the Makassar Strait.
Indonesia’s standard oil production sharing contract is 85:15 in favour of the government and 70:30 for gas. Foreign investors have cited the small production split alloted to them as a major hurdle for not investing in the country’s upstream sector.
Iin said Indonesia was not likely to meet its budget target of crude oil and condensate production for 2005.
“I think we cannot produce the level of 1.125 million barrels per day of crude and condensate this year. I think the production will be below that level,” he said.
“We will know after five to 10 years if we will find oil or gas in the new areas. But the potential is there.”
Iin added the areas on offer were not being disputed by regional countries.
Indonesia and Malaysia are embroiled in a dispute over the potentially oil-rich Ambalat area off Borneo’s east coast, and both sides have handed out contracts to foreign firms.
Iin said 14 new blocks would be offered under regular tenders and 13 by direct offers. Under direct offers, investors can choose from the 13 blocks and the government will finalise the awards after a period of advertising them on the Internet and other media, he said.
Tender documents would be available on June 15 and must be returned on Nov. 10, he said. Direct-offer documents must be submitted on July 15.
“The government is expected to announce the winner three weeks after the submission of the documents by the investors,” Iin said.
Indonesia’s crude oil production fell to the lowest level in 34 years in May to 936,000 barrels per day (bpd), from 953,000 bpd a month earlier, due to repairs on several wells, an industry source had said.
Condensate output, exempted from OPEC quotas, rose to 121,700 bpd last month from 110,000 bpd in April. Indonesia has a quota of 1.425 million bpd under the Organization of the Petroleum Exporting Countries’ formal output limits of 27.5 million bpd.
