U

S-based oil and gas company Hess Corporation will invest US$200 million per year in Indonesia in the next six to 10 years, senior officials said on Thursday.

Hess’ investments would cover the development of the Ujung Pangkah block in Gresik, East Java, and exploration activities, including at the Semai V block in West Papua, said Deputy Energy and Mineral Resources Minister Rudi Rubiandini.

The company had been given a maximum of six years for exploration within the blocks or their contracts would be terminated, according to Rudi. If the results were good, the company would invest further to exploit the blocks, he added.

“The most important thing is Hess feels comfortable in investing in Indonesia. They’re very eager to continue their businesses here,” said Rudi.

Hess has been the operator of the Ujung Pangkah block since 2007, where it controls a 75 percent stake along with the 25 percent stake owned by Kuwait Foreign Petroleum Exploration Company (Kufpec).

At the Semai V block, Hess explores through a consortium with state oil and gas firm PT Pertamina and Shell Exploration Company BV. The consortium won the concession by presenting a signing bonus of $40 million.

The block is thought to be extremely valuable because it is predicted to have potential reserves of 8 trillion cubic feet (tcf) of natural gas.

“[Hess’] representatives met with me this afternoon. They have been operating in Indonesia for long time and they are happy with the situation, so decided to add to their investments,” Energy and Mineral Resources Minister Jero Wacik told a press conference.

Hess has also signed a memorandum of understanding (MoU) with Pertamina to study the possibility of implementing enhanced oil recovery (EOR) technology by using carbon dioxide (CO2) at Pertamina’s working areas.

Jero claimed that the investments showed that Indonesia was still viewed as a good investment destination in the oil and gas industry despite recent negative comments on the country’s investment climate.

“John Hess [the company’s CEO] directly said to me that they were not afraid to add investments in Indonesia. It’s a good sign,” he emphasized.

Upstream oil and gas authority BPMigas revealed that investments in the upstream oil and gas sector were expected to hit $20.92 billion this year, jumping from $13.9 billion in 2011.

This year’s target comprises $12.84 billion for production activities, $4.56 billion for block development, $2.12 billion for exploration and $1.4 billion for administration.

During the press conference, Jero also reported that starting on Friday, industries and power plants in East Java would receive additional gas supply from the Terang Sirasun Batur field in Madura, which is operated by Kangean Energy Indonesia Limited.

“The amount of gas will reach 300 million standard cubic feet per day [mmscfd]. Some of the gas will also be used to support the government’s oil fuel-to-gas conversion program,” he said.

State power utility PT Perusahaan Listrik Negara’s (PLN) Gresik power plant will receive 130 mmscfd from the field.