6 companies vie for deep-water oil, gas fields in Makassar Straits
Wednesday, May 16 2001 - 04:30 AM WIB
Six large companies are ready to participate in the tendering of deep-water oil and gas blocks in the Makassar Straits, while state oil company Pertamina failed to enter into the tender due to financial constraints, Bisnis Indonesia reported on Wednesday.
According to senior adviser for Pertamina's upstream industries, F.X. Sujanto, the six companies ready for the tender are Shell, ExxonMobil, Total Indonesie, Conoco, Petro Bras, and Unocal.
"The winner of the tender will be announced in June. Currently, the six companies are competing to become the winner. They all have the technology, funds and adequate human resources," Sujanto said in Jakarta on Tuesday on the sidelines of a seminar on deep-water sedimentation of Southeast Asia.
The Ministry of Energy and Mineral Resources has opened the tendering of nine deep-water blocks out of the 23 blocks spreading across the country. Six out of the nine deep-water blocks are located in the Makassar Straits, while the two other blocks, namely Bawean I and Bawean II, are in the Java Sea, and the remaining one other block was Nila block in West Natuna Sea.
The other deep-water oil and gas blocks, that have not yet been offered to private investors for exploration, include those in Arafuru Sea, Seram Sea, and East Kalimantan waters.
The other oil blocks are located onshore, namely those in Central Kalimantan and in South Sulawesi.
When asked on why Pertamina did not join the tendering, Sujanto said Pertamina did not have the needed funds to cover the high risks of conducting offshore exploration activities.
He said offshore exploration had risk failure of 10 percent to 20 percent, or at least US$50 million, that is the initial costs that the tendering participants had to pay. Out of the $50 million, $30 million was to buy data from the government, $15 million was for initial cost for drilling and $5 million for other costs.
"To cover that risks, Pertamina does not have the money to cover the initial costs of exploration," he said
"The level of failure was very high, so if an oil company wants to buy the data and participate in the tender, it must be very sure that the level of success is also high," he said.
He noted that a company participating in the tender must be able to find an oil reserves of at least 400 to 500 million barrels of crude, with possible exploration period of 4 to 6 years. Therefore, it would be able to produce 75,000 to 100,000 barrels per day (bpd) of oil, with an expected oil price of $24 per barrel.
By not participating in the tender, Pertamina would lose the opportunity to get an income of Rp 5 trillion from oil exploration in the Makassar Straits.
Meanwhile, Pertamina president Baihaki Hakim said earlier that Pertamina would not join the open tendering over nine oil and gas blocks in the country because Pertamina currently knew all inside information about all the blocks. And therefore, it would not be fair for other bidders if Pertamina joined the tender.
Nevertheless, Baihaki said that Pertamina would demand that the government give Pertamina two out of nine blocks offered to private bidders. Baihaki said Pertamina wanted only two because of its financial limitations, and he did not disclose which two blocks it wanted to take. (*)