Improved T&C to Boost Oil and Gas Investment, Says Official

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 305.Pers/04/SJI/2021

Date: 3 September 2021

Improved T&C to Boost Oil and Gas Investment, Says Official

The Ministry of Energy and Mineral Resources (EMR) has improved the terms and conditions of the oil and gas work areas auction. This is done to increase the interest of upstream oil and gas investors, as stated by Director General of Oil and Gas, Tutuka Ariadji, during a panel discussion held at the 45th Convention and Exhibition of the Indonesian Petroleum Association (IPA).

"Improving the terms and conditions of the auction is proof that we have listened to inputs from the Indonesian oil and gas community, for example the IPA," said Tutuka on Wednesday (1/9).

Tutuka went on to explain that the highlight was on a higher split for investors or contractors of Production Sharing Contracts (PSCs).

For oil production, the highest split is 80% for the government and 20% for contractors, and the lowest split is 55% for the government and 45% for contractors. For gas production, the highest split is 75% for the government and 25% for contractors, and the lowest split is 50:50.

"Another incentive is a 100% price for oil and gas sold to meet DMO (Domestic Market Obligation), and this applies to both cost recovery and gross split schemes," continued Tutuka.

Additionally, the incentives are offered in the forms of a lower amount of oil and gas set aside after they are first produced or First Tranche Petroleum (FTP), no minimum amount of signature bonus, and the flexibility to choose between gross split and cost recovery schemes.

The improved terms and conditions have been applied in the 2021 Indonesia Petroleum Bid Round I, announced on 17 June 2021. There are 6 work areas on offer, namely South CPP, Sumbagsel, Rangkas, and Liman which are tendered via direct offer, and Merangin III and North Kangean via regular tender.

According to the geological risk, resource size, and infrastructure availability, 2 work areas are low risk, namely Merangin III and North Kangean, while 4 work areas, namely South CPP, Sumbagsel, Rangkas, and Liman, are moderate risk.

According to Tutuka, the prospect of oil and gas in Indonesia is still quite good. Of the 128 basins in Indonesia, 19 are in production and 109 are yet to be developed. These basins hold 4.17 billion barrels of oil reserves and 62.4 trillion cubic feet of gas reserves. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

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