ChevronTexaco outlines Indonesia oil investment issues

Indonesia needs a balance of old and new upstream developments, in partnerships with oil and gas investors, to create the competitive investment climate required to ensure the growth of the sector, the vice-chairman of ChevronTexaco Corp said Tuesday.

Accordingly, Indonesia needs to reassure its energy partners, who are facing a mix of challenges - political and regulatory, technical and scientific, financial and structural, said Peter Robertson, speaking at Indonesia Petroleum Association (IPA) conference in Jakarta.

He raised three priorities for Indonesia in his address to the Indonesian Petroleum Association event.

These are a stable and competitive investment climate, a balanced upstream portfolio to promote new exploration especially in deepwater sectors while ensuring a steady flow of investment in mature fields, and strong partnerships to work through "very difficult conditions."

Investors need "stable, secure working and operating conditions, and flexible and reasonable terms that are fully honored," Robertson said.

His comments echo industry concerns over Indonesia's implementation in two year's time of a new oil and gas law, when state-owned Pertamina will no longer manage production sharing contracts.

Many in the industry are still uncertain about the implications of the new law, and changes to the tax regime.

"Capital will tend to go where it is most welcomed and secured," Robertson said.

Uncertainty over issues like deregulation, privatization and regional autonomy are concerns for foreign investors in Indonesia while "other countries are competing very hard to attract more foreign investment," Robertson said.

New discoveries, like Indonesia's first deepwater discovery, West Seno, will contribute to a forecast 300,000 barrels a day of new oil output starting 2004, but difficulties in finding much larger fields means there is a need for continued investment in mature fields, he said.

Continued investment in the Duri oilfield over the years by ChevronTexaco's Indonesian unit, Caltex Pacific Indonesia has helped keep output there relative high, he noted.

Caltex has invested $800 million in the Duri field since 1995, when it was producing 300,000 barrels a day.

In 2001, it produced 260,000 b/d, but without the investment, output would probably have now fallen to 100,000 b/d, Robertson said. (*)