Five companies secure exploration rights
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The Energy and Mineral Resources Ministry awarded five companies exploration rights on Wednesday to develop four coal bed methane (CBM) fields and one oil and gas block.
The ministry’s director general for oil and gas Evita Herawati Legowo said that the total investment commitment for the exploration of the CBM and gas and oil blocks would amount to a total of US$44.63 million over three years, with a signing bonus of $6.5 million.
The winners included PT Equator Energy, which was awarded exploration rights for the offshore East Sokang oil and gas field in East Natuna; Dart Energy International Pte. Ltd., to develop the Bontang Bengalon CBM field in East Kalimantan; PT Bumi Parahyangan Energi to develop the Belawa CBM field in South Sulawesi; a consortium of Ephindo Sekayu 2 Inc. and Star Energy Sekayu. Ltd. to develop the Sekayu CBM field in South Sumatra; and consortium of CBM Asia Dev. Corp and PT Tranaco Utama to develop the Kuala Kapuas I CBM field in Central Kalimantan.
The ministry said winners of the four CBM blocks pledged to invest up to $15.25 million for their exploration activities over three years. They also paid signing bonuses of $5 million to the government.
Evita said that unlike before, the ministry was now more strict in selecting winners of tenders because previously, contractors failed to meet their commitments.
“We are more careful now as there is much input regarding contractors’ levels of commitment,” she told reporters after the announcement at the winners.
She said basically the ministry could accept almost any bid, however, it decided to reject one of the bids because it was not sufficiently convinced as to the contractor’s commitment or their capability in developing the block.
“For example, if the contractor needs $500,000 to drill one well then we have to know what kind of technology they are using. If we think it’s not good enough, we reject their bid,” she said.
For the oil and gas fields, the ministry initially offered five blocks to contractors, but only one was taken.
“Investors felt they were not provided with enough data on the oil and gas blocks,” she said. “It is a lesson for us that in the future we should provide better data for investors.”
Separately, executive director of ReforMiner Pri Agung Rakhmanto, said insufficient data has become the prevailing problem on oil and gas block tenders, because the government did not allocate sufficient funds for exploration.
“Currently available data is raw and out of date,” he said.
He suggested that tenders for oil and gas blocks could be conducted better in a business-to-business scheme not government-to-business because, “the business-to-business is more attractive for investors.”