Business

Twenty business deals inked
in IPA annual convention

New oil for old: A visitor looks closer at items on display on the opening day of the 33rd annual convention of the Indonesian Petroleum Association (IPA) at the Jakarta Convention Centre on Tuesday. The presentation showcases biodiesel products from various commodities, notably crude palm oil and   jatropha. JP/R. Berto Wedhatama
New oil for old: A visitor looks closer at items on display on the opening day of the 33rd annual convention of the Indonesian Petroleum Association (IPA) at the Jakarta Convention Centre on Tuesday. The presentation showcases biodiesel products from various commodities, notably crude palm oil and jatropha. JP/R. Berto Wedhatama

The Indonesian Petroleum Association (IPA) kicked off its        33rd annual convention and exhibition in Jakarta on Tuesday, by signing    20 contracts worth a total of US$1.37 billion.

Witnessed by President Susilo Bambang Yudhoyono, who officially opened the event, stakeholders of the oil and gas industry signed three coal bed methane (CBM) development contracts; twelve oil and gas exploration contracts; and five gas sales contracts.

For the CBM and oil and gas contracts, investment commitments in the first three years of exploration total $219 million, while the government will receive $26.85 million in signatory bonuses, Energy and Mineral Resources Minister Purnomo Yusgiantoro said.

“This indicates that today Indonesia is still an attractive place for oil and gas exploration activities,” Purnomo said. He added that the CBM and oil and gas contracts were expected to create approximately 2,000 new job opportunities.

The 12 oil and gas exploration contracts included the winners of 11 blocks announced last week. Evita H. Legowo, director general for oil and gas at the ministry, said the additional contract was supposed to be signed earlier, but the signing was delayed until Tuesday.

The delayed contract involves the rights of a local firm, PT Harpindo Mitra Kharisma to develop the Lampung III oil and gas block.

Purnomo said the 12 new contracts will add to the existing 107 blocks under development.
“Today, we will be adding 12 oil and gas contracts to the companies that have won previous oil and gas bidding rounds.

“Thus, there are now a total of 119 exploration acreages that will compete to find oil and gas in Indonesia,” said Purnomo.

He claimed that the country’s geological conditions combined with government fiscal incentives had boosted the attractiveness of the country to investors as proven by  steadily flowing inward investment into the upstream oil and gas sector.

Oil and gas contractors propose to spend well over $13 billion in the sector this year, despite the global economic downturn,  although the lion’s share would be mostly for investment in production activities, with a much smaller proportion dedicated to exploration activities.

The three-day IPA convention also witnessed the signing of four gas sales agreement and one head of agreement (HoA) for gas sales.

Three of the gas sales agreements were between PT Pertamina EP, as sellers, and its parent company PT Pertamina as buyer.

Another contract was signed between PT Pertamina EP and PT Pertiwi Nusantara Resources, which will buy gas for industrial users in North Sumatra.

The HoA was signed between Total E&P Indonesie and a gas-fired power plant operator in Senipah, East Kalimantan.

Purnomo said the value of gas sale agreements for five projects was about $1.15 billion and associated construction and operations would mean jobs for about 1,200 workers.

CBM block winners

Winners                                                    CBM blocks    Investment
Commitment*
Consortia PT Pertamina Hulu
Energi Metana Kalimantan B-PT Visi    
Multi Artha                                                 Sangatta II    US$9,535,695
PT Artha Widya Persada                                 Tabulako    US$6,827,125
PT Ogan Interior Gas                            Ogan Komering    US$7,050,000

*the commitment for the first three years
Source: Energy and Mineral Resources Ministry

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