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windling oil production due to aging basins will perhaps lead to a shift in the focus of the oil and gas industry with attention being directed to shale oil reserves.

The Energy and Mineral Resources Ministry's director general for oil and gas, Edy Hermantoro, said on Thursday that his office would invite several foreign investors to evaluate the potential of shale oil.

'We hope to be able to produce shale oil, an unconventional type of crude, since we have already developed the unconventional natural gas, coal bed methane,' Edy said.

Shale oil crude is a dark oil obtained from oil shale'any fine-grained sedimentary rock that contains solid organic matter'by destructive distillation.

Shale gas, a natural gas, is produced from similar geological formations.

Shale gas extraction is carried out by injecting water and chemicals into the rocks through a highly controversial technique known as hydraulic fracturing, or more usually, 'fracking'.

As reported by Reuters on April 29, US crude oil exports doubled in February to 124,000 barrels per day (bpd) as a result of a shale oil boom in North America.

Last year, the Energy and Mineral Resources Ministry announced an estimate of total shale gas resources of around 574 trillion cubic feet (tcf) throughout Sumatra, Kalimantan, Papua and Java.

Coal bed methane (CBM) reserves are estimated to be around 453 trillion cubic feet, mainly in Sumatra and Kalimantan, according the Energy and Mineral Resources Ministry.

This year, the government will offering around four working contracts to develop shale gas.

State-owned oil and gas firm PT Pertamina start exploration in its working area in North Sumatra with the contract scheduled to be signed this May.

Foreign firms are expected to obtain the four shale gas contracts on offer this year.

Unconventional hydrocarbon reserves must be explored and exploited to meet soaring domestic demand for energy.

1.4 million barrel of crude oil per day (bpd) are needed to meet domestic needs.

However, current oil output only reaches 840,000 bpd, of which one third is allocated to the oil and gas contractors as their share.

This share is almost invariably exported.

This means that only 500,000 to 600,000 bpd of oil remains in the domestic market, less than half the requirement. The rest must be imported.

An increase in fossil fuel production which remained on the domestic market would reduce imports, which in turn would help close the widening trade deficit, mostly attributable to fuel imports.

While Indonesia is third largest liquefied natural gas (LNG) exporter in the world behind Malaysia and Qatar, there is insufficient gas infrastructure to make use of natural gas and so most production is exported in long-term contracts.