Pertamina launches new strategy to lure oil and gas investors

State oil and gas company Pertamina has been conducting general surveys on the areas it was going to offer to oil and gas investors to minimize their risks and cut their investment costs during exploration, company president Baihaki Hakim said on Wednesday.

"It is our new strategy to lure oil and gas investors. With the new strategy, we want to minimize their risks," Baihaki told Petromindo.Com on the sidelines of the hearing with the House of Representatives' Commission VIII for mines and energy

In the past, Baihaki said, investors did the general surveys on their own. Under the new program, investors will be provided with enough data prior to exploration activities.

Baihaki said the program was launched last year and Pertamina together with some survey companies have been conducting general surveys in six blocks in the Makassar Straits in the first phase of the program.

He said the strategy was launched following an apparent decline in the interest of oil and gas investors in the country.

Last year, Pertamina awarded only four contracts for oil and gas companies, as against 22 contracts in 1998 and 29 contract in 1997.

Last month, Pertamina awarded seven new contracts, the first contracts of the year.

Baihaki said Pertamina expected to sign some other contracts this year.

He said investors considered the western part of Indonesia a mature area. They saw a lot of potentials in the less-developed eastern part of Indonesia but they considered the region highly risky and the cost was considered too high for investment in the region.

Globally, oil and gas investors are now eyeing other countries, including the western part of Africa which have been showing fast development in the oil and gas sector.

"Thus, Indonesia is not the only promising country," Baihaki said.

Pertamina has offered some incentives for oil and gas investors to develop oil and gas resources in the eastern part of Indonesia and other frontier areas, including an increase in their shares in the oil and gas output extracted in the region.

Under the standard production sharing contracts, oil and gas investors take 85 percent of the oil output and 30 percent of the gas output, delivering the rest to the government through Pertamina.

Under the incentive packages, the production share of investors developing oil and gas resources in the eastern part of Indonesia and frontier areas is increased to 40 percent for oil and 45 percent for gas.

Baihaki said Pertamina would not offer new incentive packages to lure back oil and gas investors into the country.

"The existing incentive packages are enough. What we are doing now is to minimize their risks by conducting general surveys in the new areas that we are going to offer to investors," Baihaki said. (*)