Govt adopts online auction for oil, gas blocks

The government from now on will apply an online tender system in offering oil and gas blocks to investors to help ensure transparency and minimize contact with the bidders, thus avoiding unfair practices, said Djoko Siswanto, Director for Upstream Oil and Gas Management at the Ministry of Energy and Mineral Resources, during the fourth United States-Indonesia Energy Investment Roundtable Thursday as quoted by a ministry statement.

He added the government doesn?t want to see unfair practices of the past as tender committee made contact with bidders to happen again.

As reported earlier, the government will also allow investors in new oil and gas blocks to use new contract schemes aside from the traditional production sharing scheme (PSC). Investors are expected to be interested in the blocks if they are offered with several contract options. The new contract schemes are ?gross split? and ?sliding scale?. Under these schemes, the government will no longer reimburse the contractors? expenses, a practice known as ?cost recovery?. Instead, investors will be allowed to take the largest portion of first production so that they can recoup their investment. Once they have recouped most of their investment, the government will get a bigger production.

Elsewhere, the ministry statement said the government plans this year to offer 11 oil and gas working areas, both conventional and non-conventional.

There are eight conventional working areas to be offered including three to be conducted via direct offer namely the North Jabung (onshore Riau and Jambi), Southwest Bengara (onshore East Kalimantan), and West Berau (offshore West Papua). Five others will be offered via regular tender including Rupat Labuhan (offshore Riau and North Sumatra), West Asri (offshore Lampung), Oti (offshore East Kalimantan), North Adang (offshore West Sulawesi), and Kasuri II (onshore Papua).

Meanwhile, there are three non-conventional working areas to be offered including Blora Deep, Central Bangkanai, and Batu Ampar.

Editing by Reiner Simanjuntak