Govt puts 41 oil and gas contracts on the block

The Jakarta Post, Jakarta

The government is inviting foreign and domestic investors to exploit 41 onshore and offshore oil and gas blocks in onshore and offshore Sumatra, Kalimantan, Sulawesi and Java under production-sharing schemes to help boost the country's dwindling oil production.

"We will award contracts for 20 of the blocks through tenders and the other 21 on the basis of direct offers," said Luluk Sumiarso, the director general of oil and gas of the Energy and Mineral Resources Ministry, on Tuesday.

The blocks being put out to tender, of which eight failed to attract bids during previous rounds, are located in the Natuna area, South Sumatra, East Kalimantan, West Sulawesi, Lampung and West Java, he said.

"In Natuna, the government is putting three new offshore blocks -- Tuna, Cucut and Dolphin -- out to tender, as well as three available offshore blocks -- Cakalang, Baronang and Kerapu," he said.

An available block is one that was previously tendered but failed to attract bids.

He said that the government was also tendering the new onshore West Air Komering block in South Sumatra, and the Southeast Mahakam, Tigau and Menatana blocks, all of which are offshore East Kalimantan.

Also on the table were new blocks at Madang, South Mandar, Sageri and South Sageri off the coast of South Sulawesi, and the Enrekang block in onshore South Sulawesi. The government was also tendering three new offshore blocks in West Sulawesi -- Karama, Malunda and Mandar.

In Lampung, the offshore Lampung I block and, in West Java, the offshore and onshore blocks in Ujung Kulon would also be put out to tender.

Luluk said that firms interested in any of the blocks should submit their bids and proposals to his office starting Aug. 28. He added that the deadline for the submission of direct offer documents was 2.30 p.m. on Aug. 11, while that for bid documents was 2.30 p.m. on Dec. 26.

"For direct offer documents, we will hold them for 14 days. If another company submits better proposals regarding exploration and signature-bonus commitments, then we will select this company," he said.

So far, he explained, 80 percent of the companies making direct offers were domestic firms.

According to Luluk, all companies had to submit to the same principles regarding the terms and conditions of production-sharing contracts. For example, they would be required to sign 30-year contracts to commercially exploit the oil and gas found, which contracts would be extendible.

The exploration period would last for six years and could be extended for a final four years.

"They must agree that the government will get around 80 percent of the production proceeds in non-frontier areas and around 65 percent in frontier areas," he added.

He said that the Upstream Oil and Gas Regulatory Agency (BP Migas) would evaluate the proposals and bids before determining which firms would be awarded contracts.

The ministry's director of upstream oil and gas development, R. Priyono, said that the participants could obtain bid documents and direct offer documents for a fee of US$5,000.

The 21 contracts that will be awarded to investors through the direct offer mechanism are located in Natuna, North Sumatra, Central Sumatra, West Sumatra, East Java, East Kalimantan, South East Sulawesi, South Sulawesi and West Sulawesi.

They include the offshore Duyung and Pari blocks in Natuna, the offshore Tonga block in North Sumatra, the offshore and onshore Buton blocks in Southeast Sulawesi and the Karana block in the Makassar Strait.

In East Kalimantan, they consist of the offshore and onshore Kutai blocks, the onshore West Sangatta block, and the offshore Mahakam Hilir and Wain blocks.

Last year, the government awarded 15 production-sharing contracts following the holding of tenders, bringing the total number of new contracts since 2001 to 86. ^B(05)^B
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