Dry holes cost industry $1.24b in two years

Up to US$1.24 billion spent by oil and gas producers have vanished over the past two years as explorations found nothing but dry hole wells, a fact that upstream authority BPMIGAS says as a reflection of the industry?s high business risk.

During a hearing with the House of Representatives? Commission VII on Thursday, BPMIGAS said that dry hole wells numbered 30 in 2010 costing some US$776 million and 12 in 2011 at a cost of US$461 million.

Dry hole is term used when explorations in an oil or gas well failed to find oil or gas in economically sufficient quantities. In Indonesia, such investment is not covered by the government?s cost recovery system as it only applies to producing fields.

?This high business risk discouraged many investors, as they could end up losing all of their investment. This is why we still very much need foreign investors,? BPMIGAS Chairman R. Priyono told the lawmakers.

Editing by Dadan Wijaksana