Ministry plans incentives for ultra-deepwater upstream projects

Petromindo

The Ministry of Energy and Mineral Resources is planning to provide incentives for ultra-deepwater upstream oil and gas projects with depth of more than 1,500 meters undersea.

Director General of Oil and Gas at the ministry, IGN Wiratmaja Puja said in a statement over the weekend that the ministry is currently reviewing the planned incentive policy whether it would be issued in the form of ministerial regulation, presidential regulation, or only be part of the gross split ruling, considering that under the ministerial regulation on gross split mechanism, the government provides contractors with extra 16 percent split for deepwater projects.

He said that for this purpose, the government must make quantitative calculation. He added that the government has asked for the assistance of ENI, Shell, and Chevron, all of whom have experience in managing deepwater projects.

?It is expected the results can be obtained within the next two weeks. The planned incentives are not yet ascertained whether it would be in the form of additional split, investment credit, or tax reduction,? Wiratmaja said.

He acknowledged that developing ultra-deepwater oil and gas projects in Indonesia is quite difficult, even compared to similar projects in other countries such as Qatar and Egypt, because of the complex subsurface which requires high technology.

He added that other countries have provide incentives for such projects such as in India where contractors obtain 100 percent of the output for the first seven years, and after that the government only gets 5 percent output split. ?This has enticed investors, and lure them to India,? he said.

Editing by Reiner Simanjuntak