Govt plans more attractive gas production split

The government may change the production split for gas production in frontier and deep-sea locations to 50: 50 in favor of investors in order to attract more companies to enter difficult gas exploration areas, Kontan reported Wednesday.

 

Luluk Sumiarso, the director general of oil and gas at the ministry of energy and mineral resources, said in Jakarta Tuesday that with the current production split of 60:40 in favor of the government, investors were still reluctant to enter difficult exploration areas such as in remote and deep sea locations.

 

"It is therefore quite possible for the government to change the production split to 50:50 in order to make those difficult areas more attractive," he was quoted as saying.

 

At present, the production split for development of gas fields in normal areas is 70:30, meaning that the government will receive 70 percent from the net production, while the contractor will get the remaining 30 percent.

 

For difficult exploration areas such as in frontier and deep sea locations, the gas production split is 60:40. In this split, the government will receive 60 percent and the investor will get the other 40 percent of the net gas production.

 

The government is offering a production split of 51:49 for the development of the Block A gas field in Aceh. Under this production split, which is now under discussion, the government will receive 51 percent from the net gas production.

 

Several investors such as ENI and Santos Limited are asking for a production split of 51:49 for their respective Krueng Mane block and Jeruk gas field. (*)