Govt prepares incentive package for oil and gas sector

The government has prepared several incentives in case of 300 brown fields , especially located in Kalimantan and Sumatra, the Investor Daily Indonesia newspaper reported in its Tuesday edition.

One of the incentives, which will be given by the government, is in the form of cost recovery. This measure has been adopted in order to reach the oil production target of 1.3 million barrels of oil by 2009.

Ministry of Energy and Mineral Resources? director of upstream business Novian M Thaib said the incentive will be given by the government in the form of compensation to ease the burden of the oil companies.

?If the company spends (Rp) 100, the government will give additional (Rp) 25. So the company has the right to enjoy (Rp) 25 from its expenditure of (Rp) 100,? Novian said in Jakarta on Monday after attending a discussion.

? We intentionally don?t want to give incentive by increasing the production split because the objective is to motivate the companies to increase the oil production,? Novian said.

He further said that the government is also preparing incentives for the development of marginal, and frontier oil fields in around 22 deep basins.

?For these fields, the incentives are being calculated. They can be in the forms of relaxing rules or increasing the production split,? he said. Probably, the cost recovery system may be applied in case of marginal fields. (*)