Andaman suitors back off due to regulatory uncertainty

By Godang Sitompul

Canadian oil and gas giant Talisman Energy Inc. is facing major hurdle in farming out part of its interest in Andaman III exploration block offshore Aceh as interested bidders are backing off due to regulation uncertainty on oil and gas governance in the province.

A Petromindo.Com source said over the week-end that thus far the role of central government and Aceh provincial government is not clear in managing upstream oil and gas business in the province.

The source said that potential conflicting role between the two authorities has caused potential bidders to withdraw from the farm-out process despite the fact that the block has potential reserves of up to 1.5 billion oil equivalent.

?The Aceh government said that they might change the PSC terms and condition in case of discovery,? the source said.

Talisman said in November 8, 2013 that it has commenced process to farm down a portion of its 100 percent operated interest in the Andaman III PSC.

Under the Aceh special autonomy law, the province was given authority to manage its oil and gas resources . However, thus far regulation on the oil and gas management has not yet been completed as it has yet to reach agreement with the central government on division of role.

Andaman III was awarded by the central government in 2009, when the government of Aceh under special autonomy law has been in place.

Editing by Alexander Ginting