Provinces will be allowed to operate marginal oil wells

BPMIGAS will allow provincial authorities to operate and manage marginal oil wells as a response to the growing the demand from the local residents to take part in exploration and production activities in their provinces, Bisnis Indonesia reported on Tuesday.

Director for Research and Development of BPMIGAS, Abdul Muin, said in Jakarta on Monday that the operation of marginal wells would not be too costly so that provincial governments would not face difficulties in seeking the funding of such projects.

"A marginal oil well produces less than 1,000 barrels per day but if it is operated and managed properly, it will give a significant contribution to the local economy," he was quoted as saying by the daily. However, he said that the local government should have the technology in developing such old and small oil wells. "If not, the operation of such wells will only cause a problem," he added.

He said that the government through BPMIGAS which is responsible for the supervision of oil and gas exploration and production activities should first prepare the legal instruments to ensure the smooth participation of provincial administrations in oil and gas production activities.

The chairman of BPMIGAS Rachmat Sudibyo said earlier that the Oil and Gas Law has already given access to the participation of provincial administration in oil and gas exploration and production activities. "One of the article in the law allows Indonesian participation up to 10 percent," he said. (*)