Govt to provide incentives for explorations

The government has decided to give a number of incentives to encourage investors to do explorations so that Indonesia can raise its new reserves.

?It?s impossible to increase reserves without explorations. The only way to raise reserves is exploration, exploration, exploration? This is what I?m fighting for,? Energy and Mineral Resources Minister Jero Wacik said when addressing the 6th IndoGAS 2013 Conference & Exhibition, in Jakarta on Monday.

But he admitted that it was not easy for him to encourage investments in the explorations, particularly because explorations will only give results in 10 years..

?Therefore, to encourage more explorations, we have to provide incentives. We have to design regulations that are more friendly and financially attractive for exploration activities,? he said.

He pointed out that the incentives to be given would be concerned also with other ministers. ?I?ll accelerate the process of licensing on the part of my ministry?s authority. On the financial incentives, such as tax, I?ve asked minister of finance to provide them. They?re in a process of designing the financial incentives,? he added.

According to him, oil and gas investors have no objection regarding the split. ?What they?re against with is the tax. Still in explorations but they are taxed. If it is after production, that?s okay,? he said.

He noted that based on the seismic tests conducted by the agency of geology, Indonesia still has many potential locations for new reserves, but all could only be proven through explorations. ?So, exploration, that?s what we have to pursue in the upstream. We have to work hard for it. Without it, we cannot expect sustainable growth of our oil and gas,? he added.

He said that the gas reserve had been increasing every year, but only until the year 2016-2018. ?I have to prepare gas for the year 2024 until 2034. So we have to increase explorations. We have still many potential basins in the eastern Indonesia,? he said.

Indonesia has 60 basins that potentially contain gas reserves. Only 38 basins of the total that had been explored. But there have been no explorations so far in the other 22 basins, which are mostly offshore in deep water.

Of the 38 basin that had been explored, 16 basins have produced hydrocarbons, 9 basins are not yet in production although they have already proven to contain hydrocarbons, while in the other 15 basins explorations had been conducted but there was no discovery of hydrocarbon.

Editing by Benget Besalicto Tnb.