Govt mulls extending oil, gas exploration period

The government is planning to extend the oil and gas exploration period by another two years as part of incentives to help oil and gas contractors cope with the current oil price drop.

Director General of Oil and gas at the Ministry of Energy and Mineral Resources IGN Wiratmaja Puja said in a statement obtained Thursday that a new ministerial regulation or presidential regulation will be issued on the planned incentives.

According to current regulation, oil and gas contractors are given three years to carry out exploration, and can be extended by another three years. As the current oil price drop has affected the finances of oil and gas companies, the government is reviewing the possibility of extending the exploration period by another two years to make a total of eight years.

Wiratmaja said that a number of oil and gas contractors have requested for the additional extension of the exploration period. He did not disclose the name of the contractors.

Wiratmaja said that contractors facing limited funding capacity can temporarily withhold their planned drilling programs, shifting to other activities such as well analysis. Other incentives include allowing contractors having more than one working areas to shift its exploration plan to blocks with lower exploration cost.

Incentives are also planned for contractors which have already entered production stage. For instance by introducing production split in the form of dynamic split/sliding scale revenue over cost. Wiratmaja said that this is still being discussed with other related ministries.

He added that the government is also planning to provide incentives for non-conventional oil and gas blocks such as CBM and shale gas.

Editing by Reiner Simanjuntak