Investors bid for five oil, gas blocks

By Godang Sitompul

Seven contractors have submitted their bids for five conventional oil and gas working areas of the total seven conventional working areas offered by the government via direct offer mechanism, which was closed on Friday.

The seven conventional oil and gas working areas are part of the total 15 conventional and non-conventional working areas offered by the government via direct offer and regular tender mechanisms in the period of 2017. The government will apply the new gross split scheme production sharing contract for the oil and gas blocks, replacing the previous cost recovery contract. The offer was closed on Friday after President Joko Widodo finally signed on Thursday the government regulation on tax system for the gross split scheme oil and gas contract, providing various tax and fiscal incentives for upstream investors.

Deputy Minister of Energy and Mineral Resources Arcandra Tahar told reporters that there were no bids made on the remaining working areas offered including two conventional working areas offered via direct offer mechanism, three conventional working areas offered via regular tender, and on the five non-conventional working areas (three offered via direct offer and two via regular tender).

Arcandra, however, claimed that although bids were only made on five working areas (out of the total 15 working areas offered to investors), the offer was a success, adding that investors are attracted to the new gross split scheme. He pointed out that of the eight oil and gas blocks offered in 2015 and 14 oil and gas blocks offered in 2016, both using the previous cost recovery mechanism, none were taken up by investors.

The seven investors which submitted their bids on five oil and gas blocks will negotiate with the government, which will then select the best proposals. Contracts over the blocks are expected to be signed in March 2018, Arcandra said.

Arcandra said that Mubadala Petroleum (SE Asia) Ltd made a bid on the Andaman I working area in Aceh. Three investors, namely Repsol Exploracion SA, PT Energi Mega Persada Tbk, and a consortium comprising of Premier Oil Far East Ltd, Mubadala Petroleum (SE Asia), and Kris Energy bid for Andaman II block, also in Aceh,

PT Tansri Madjid Energy made a bid on Merak-Lampung block, offshore and onshore Banten and Lampung; PT Saka Energy Indonesia made bids on Pekawai block, offshore East Kalimantan; and West Yamdena block, offshore and onshore Maluku.

Elsewhere, Arcandra said that the government will open tender in January of next year for oil and gas blocks which were not taken up during the offer made in 2015 and 2016.

Editing by Reiner Simanjuntak