Ministry steps up pressure on oil, gas contractors

By Godang Sitompul

Petromindo

The Ministry of Energy and Mineral Resources is stepping up pressure on oil and gas contractors operating in the country to realize their exploration and production commitments.

Deputy Minister of Energy and Mineral Resources Arcandra Tahar said on Friday that he has asked the upstream oil and gas authority SKK Migas to closely monitor the production performance of the oil and gas production sharing contractors particularly those, categorized as red and pink label contractors, which have yet to realize their production targets.

?I have been going to the SKK Migas office two days in a row. I?ve asked SKK Migas to evaluate the red and pink label (contractors) every three months. As long as they have yet to meet production (target), we?ll go after them,? he told Petromindo.com.

During a meeting late last week with oil and gas contractors, Arcandra also asked them to realize their exploration commitments as agreed under the production sharing contract.

?We honor the contracts, but if the exploration commitments are not realized, the risk is we terminate (the contract),? he said during the meeting.

Of the total 279 oil and gas upstream working areas in the country, 194 are exploration areas. According to SKK Migas, exploration activities have been declining during the past four years, thus undermining new oil and gas finds and the country?s oil and gas reserves.

Based on information collected by SKK Migas, the largest obstacle in carrying out exploration activities is internal problem of the contractors, occurring in 45 working areas. Other major problems regulatory and social, occurring in 42 working areas.

SKK Migas said last year that the country?s oil reserves declined to 3.6 billion stock tank barrels by end of 2015 from 3.62 billion in the previous year. With national oil demand at more than 1.6 million bpd, and production of around 820,000 bpd, without new findings, the country?s proven oil reserves could deplete in little over a decade. SKK Migas said that there are 3.7 billion stock tank barrels of potential reserves that could help the upstream sector back on its feet if found.

Arcandra, during the meeting, promised that the government will help contractors in resolving the various obstacles.

Editing by Reiner Simanjuntak