JAKARTA May 19 Indonesia is offering 15
conventional and unconventional oil and gas blocks to potential
bidders, government officials said on Friday, hoping more
flexible terms will help reverse flagging interest in the sector
after lacklustre performance in 2016.
This year the government is applying new production sharing
rules and will revise rules on recoverable costs and cut import
duties on exploration equipment where possible, said deputy
energy minister Arcandra Tahar, among efforts to incentivise new
"If you can show us in your analysis and data that the split
is not good enough, let's talk," Tahar said, promising to listen
more closely to investors.
"If the result is not enough, we have 5 percent discretion
from the minister. If that's still not enough, now we have a
The latest offer includes 10 conventional blocks and 5
non-conventional oil and gas blocks and all will be offered
under a gross split production sharing contract scheme,
Wiratmaja Puja, director general of oil and gas told reporters.
Unlike the conventional pools of oil and natural gas,
unconventional oil and natural gas do not flow naturally through
the rock, making them much more difficult to produce.
Details of the offer are below:
Conventional oil and gas blocks
1. Tongkol (East Natuna Basin)
2. East Tanimbar (Maluku)
3. Memberamo (Papua)
1. Andaman I
2. Andaman II
3.South Tuna (Riau island)
4. Merak (Banten&Lampung)
5. Pekawai (East Kalimantan)
6. West Yamdena (Maluku)
7. Kasuri III (West Papua)
Non-conventional oil and gas blocks
1. Jambi I
2. Jambi II
Coal bed methane:
1. Raja (South Sumatra)
2. Bungamas (South Sumatra)
3. West Air Komering (South Sumatra)
Indonesia offered a total of 17 oil and gas blocks last year,
according to Tunggal, Indonesia's upstream oil and gas director.
"There were lots of bids, but because of evaluations in the
end there was only one winner," he said.
Thin interest in the 2016 tender was a result of low oil
prices, among other factors, said Tahar, who denied that
Indonesia was unattractive to energy investors.
"It wasn't the (investment) climate, but there was a
combination of what investors' strategies were like (and) oil
prices were down," Tahar told reporters, noting that the
recently introduced gross split mechanism had not proven to be
more or less attractive yet.
"In fact we are now more open to change things that never
used to be changed. We have opened everything now," he added.
"When oil prices pick up (investment) doesn't necessarily go
up. It's slow - there's a lag."
But industry participants were less enthusiastic about the
latest offer, and said more work is still needed to make
"In Indonesia at the moment, the returns are difficult, the
time to get a return is too long, and the risk of political
involvement is quite high," said Andrew Harwood, director of
Asia Pacific upstream oil and gas research at WoodMackenzie.
"So it's difficult for Indonesia at the current stage to get
the gross split to be attractive against other opportunities oil
and gas companies have elsewhere," he said referring to
opportunities in the Gulf of Mexico, Africa, Europe and
The sentiment was shared by oil company executives.
"Indonesia is less economically competitive than other
countries," said one executive at an international oil company
operating in Indonesia, speaking on condition of anonymity
because of the sensitivity of the matter.
"Production is going down in oil and gas, while a lot of
countries are increasing, so I think that says it all."
Despite President Joko Widodo's efforts to improve the ease
of doing business for energy investors in Indonesia, there is
"still much more work to do," he said.
Countries that have traditionally done a very good job in
attracting capital from energy investors were those that
provided competitive fiscal terms, contract sanctity and a
stable regulatory regime, he said.
"Indonesia has to compete well for capital or they'll go
(Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing
by Elaine Hardcastle)