Success ratio in oil and gas exploration still low

Investment in oil and gas sector is not only still too expensive but also too risky for local investors, according to Supramu Santosa, the president of national company PT Star Energy.

Speaking in a seminar on opportunities and challenges in the country's oil and gas sector, Supramu said that an investor would need at least US$50 million start exploration activities while the success ratio was only between eight and 10 percent.

"Investing in oil exploration will not only need a large investment but also pose a high risk," he was quoted as saying by Bisnis Indonesia.

Santoso said that the minimum investment requirement in exploration activities would reach between US$29 million and US$32 million. Such amount of funds is needed for basic needs of exploration activities such as contract acquisition, seismic survey, overhead costs for about four years.

He suggested that in order to minimize the risk, it would be better for local firms to acquire an oil field, which has been developed by other investors. In order to minimize investment costs, they could set up partnership with other firms for the purchase of the field.

"Banks generally can provide up to 25 percent to 30 percent of investment costs in an oil field which has begun production," he said. (*)