Government plans incentives to lure investment in marginal oil fields

The government will introduce special incentives to attract investors to develop marginal oil blocks in a number of oil concession areas which have already left behind by oil companies due to their low production capacities, Suara Karya reported on Tuesday.

?The introduction of the incentives will be made to help halt the decline in the country?s oil production,? said Novian M. Thaib, the director of oil and gas exploration and production at the ministry of energy and mineral resources.

The marginal oil blocks have been dumped by major oil companies for economic reasons. For large oil firms, having a major operation in such oil fields is not economically viable. However, for smaller companies, such oil blocs remain promising.

Pertamina has also said that it will also return a number of oil blocks in several areas including Aceh, Papua and Ujung Kulon to the government for a similar reason.

Indonesia?s crude oil production has indicated a declining trend during the past several years due to the decline in the oil reserves and the lack of major oil discoveries. This year, the crude oil production is expected to decline to about 1 million barrels per day from about 1.3 million barrels in 2003. (*)