Government plans more incentives for oil, gas contractors
Wednesday, April 27 2016 - 02:11 AM WIB
The government is planning to provide more incentives for oil and gas contractors operating in the country amid the current oil price drop in a bid to encourage exploration activities to find new reserves and boost future production, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources IGN Wiratmaja Puja said.
Wiratmaja said in a statement obtained Wednesday that if the incentives can be given now, the country could obtain additional oil production of 700,000 bpd in 2025.
He said that without the incentives, the country?s oil and gas production is feared to further decline from the current annual declining rate of 18-20 percent. ?We have to do something. If exploration activities are conducted in a business as usual (fashion), production will continue to decline,? he said.
The last major reserves find in Indonesia was the Cepu block made 15 years ago, the statement said. Geologists said that Indonesia still have plenty of huge oil and gas reserves.
The statement said that one of the planned incentives is extension of oil and gas exploration period, which consequently will extend the period of the production sharing contract.
The ministry is also considering providing tax incentives, but Wiratmaja said that the plan must be discussed first with the Ministry of Finance.
Upstream Director at the Ministry of Energy and Mineral Resources, Djoko Siswanto said that among of the proposed tax incentives include eliminating import tax and value added tax during exploration period. ?They?re all still at the proposal stage, but we?ll immediately provide (it),? he said as quoted by Kontan. He added that incentive in the form of greater production split for the contractors is also being discussed by the government.
The government has earlier exempted the so-called land and building tax (or PBB) on oil and gas blocks still at exploration stage.
The country?s oil lifting as per early April stood at 840,000 bpd, slightly higher than the 830,000 bpd target set in the 2016 state budget. Gas output averaged at 8,115 mmscfd, higher than the 7,825 mmscfd target in the state budget.
Editing by Reiner Simanjuntak