New ruling planned to allow contractors to move exploration location

The government is drafting a new ruling that would allow upstream oil and gas contractors to move the location of their exploration activities to more prospective areas.

Deputy Minister of Energy and Mineral Resources Arcandra Tahar said in a statement late last week that the planned new policy forms part of strategy to help lure investors in developing the country?s upstream oil and gas sector.

?Production sharing contractors have rights or option to stop exploration (activities) if the chance for success is quite low, and move it to other oil and gas working areas they operate,? Arcandra said.

He cited as an example that a contractor with exploration commitment of 10 wells, but after drilling five wells could not find encouraging results, then the contractor is allowed to move the location of the drilling program to other area which it manages. ?Moving the location is possible,? he said.

Director General of Oil and Gas at the ministry, IGN Wiratmaja Puja said in the statement that the planned new policy on flexibility of exploration location will be part of the revision of Government Regulation No 35/2004. ?We want to revise (the regulation) to be flexible. If a contractor could not fine oil and gas in one area, it can move (the exploration program) to another area. The commitment is still the same, the budget remains,? he said.

Editing by Reiner Simanjuntak