Oil Stake for Domestic Companies Mooted

Indonesia may require oil and gas explorers to set aside 10% of new developments to domestic companies in addition to the 10% given to provincial governments.

The government is considering applying the ruling to new contracts as well as extensions to existing projects, Bloomberg quoted Kardaya Warnika, chairman of oil and gas regulator BP Migas, as telling reporters on Monday (24/9/07).

Under current regulations, contractors must offer 10% of interest to companies owned by local governments after the regulator approves the first development plan.

The energy ministry has to approve the new proposal before it comes into effect, Warnika said.

Indonesia will offer at least 25 areas this year, R. Priyono, upstream director at the energy ministry, said on September 21. Exxon, the world's biggest publicly traded oil company, Chevron and Royal Dutch Shell Plc may bid, he said.

Total SA, Europe's third-largest oil company, is seeking a 15-year extension to its drilling contract in the Mahakam Delta that will expire in 2017, Philippe Armand, president of the company's Indonesian unit, said on March 26. The area in East Kalimantan province, owned jointly by Total and Inpex Holdings Inc., produces about 2.6 billion cubic feet of gas a day.
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