T

he government plans to finance seismic surveys in the search for potential oil and gas reserves as several contractors have decided to return unprofitable oil and gas concessions to the government.

Newly appointed oil and gas director general with the Energy and Mineral Resources Ministry, Edy Hermantoro told The Jakarta Post on Thursday that the government would allocate funds from the 2013 state budget for the surveys.

“This year, the government will spend around Rp 100 billion (US$10.3 million) from the state budget to conduct more 2-D seismic surveys to improve our geographical data before offering them to the oil and gas contractors,” he said in Jakarta.

Lack of seismic data from the government has often been blamed as the factor that makes global energy giants reluctant to come to Indonesia, as previously reported by the Post.

George Barber, an associate with the Jakarta-based Indonesia-International Energy Solution Partners, suggested the Indonesian government tap into other survey options such as the Remote Earth Sensing Data Analysis System (RESDAS).

“If a pre-survey by RESDAS is carried out, drilling in a dry area may possibly be avoided,” said Barber, who has 40 years experience as a hydrographic surveyor.

RESDAS is a developed service that has been executed in a number of regions in Russia, Kazakhstan, the Caribbean and elsewhere. Russia’s second-largest oil producer Lukoil is a noted company that uses the technology.

Indonesia, which resigned from the Organization of the Petroleum Exporting Countries (OPEC) in 2008 after becoming a net oil importer following a decline in crude oil production due to aging wells, expects to find other oil and gas reserves in the deep waters of the country’s eastern region.

The upstream oil and gas regulatory special task force SKKMigas has predicted that oil production by the end of this year will hit its lowest level at around 830,000 barrels per day (bpd) while natural gas output will be around 1.2 million barrels of oil equivalent per day (boepd), lower than the original target of 1.36 million boepd.

 Several large oil and gas firms have decided to return their offshore blocks in the eastern region this year after years of unprofitable exploration.

The latest contractor likely to join the club is US-based oil and gas company Hess Corporation.

SKKMigas operations deputy Gde Pradnyana said on Thursday that Hess Indonesia, the local subsidiary of the New York-based firm, had notified officials about its plan to return its Semai V block in West Papua.

 Hess is one of several oil and gas contractors in Indonesia to have suffered enormous losses from 2009 to 2012 in fruitless exploration.

Other players in the industry who have experienced similar losses include US-based Murphy, which has lost $214.6 million exploring the Semai II block, also off Papua, over the four years since 2009.

US-based ExxonMobil, Norway’s Statoil, US-based ConocoPhillips, US-based Marathon and Netherlands-based Tately NV have all decided to return their blocks in the Makassar Strait, Sulawesi after deeming the basins uneconomical.

In total, the contractors exploring the deep waters of Maluku, Papua and Sulawesi lost $1.6 billion in the period of 2009-2012.

The losses will not be reimbursed by the Indonesian government as only companies entering production activities can benefit from the government’s cost recovery scheme.