Government extends oil, gas exploration period

The government will extend oil and gas exploration period as part of incentives for upstream oil and gas companies amid the lingering oil price drop, Bisnis Indonesia reported on Wednesday.

Director for Oil and Gas Upstream Management at the Ministry of Energy and Mineral Resources, Djoko Siswanto was quoted by the paper as saying that the extension of the oil and gas exploration period will help maintain exploitation activities amid the current weak oil price environment.

Oil price has dropped to a 12-year low of below US$30 per barrel, the paper said.

According to existing Government Regulation No 35/2004, upstream companies are given six years to carry out exploration activities. The firms can request for an extension of up to four years. If by the tenth year the drilling activities are still in progress, another extension can be given until the activities are completed, the paper said.

?The fastest probably is to provide longer exploration period by maintaining exploitation or production period of 20 years,? Djoko told the paper.

In addition, if exploration has been hampered by permitting procedure, extension period will also be given. Longer period for construction of production facilities will also be provided. ?The period for construction of production facilities is 5-10 years,? he added.

The new policy will be applied on new oil and gas working areas, the paper said.

Sammy Hamzah, Director of the Indonesian Petroleum Association (IPA) welcomes the new policy, saying it would help maintain upstream oil and gas companies amid the current weak price environment. (*)