T

he government may soon agree on assistance to help US oil and gas giant Chevron realize its US$12 billion-investment project, which has been held up by permit issues, newly appointed Coordinating Economic Minister Chairul Tanjung has said.

Chairul said on Monday that he had discussed Chevron'€™s stalled investment project with President Susilo Bambang Yudhoyono and that he would soon coordinate with the related ministries to find a solution.

Chairul quoted Chevron CEO for Asia Pacific as saying that the company would allocate its $12 billion-budget for a deep water drilling project to another country with less hurdles, if a solution could not be reached by the end of this month.

'€œThe CEO told me in the Philippines [on the sidelines of the World Economic Forum on East Asia] that Chevron had allocated the billion-dollar investment budget to Indonesia, but it was still on hold,'€ Chairul said after a coordination meeting, on food price stabilization ahead of Ramadhan fasting month, at his Jakarta office.

The government will not let the billion dollar-investment be canceled, he stressed.

Chevron obtained approval in 2008 for a plan of development (POD) for the $12 billion-project, known as the Indonesia Deepwater Development (IDD) project.

The project involves four production sharing contracts (PSCs) namely Ganal, Rapak, Makassar Strait and Muara Bakau.

Red tape and legal uncertainty are the major issues for most of oil and gas companies operating in Indonesia, said ConocoPhillips Indonesia president and general managers Eric Isaacson.

It took up to two weeks for certification, 24 to 30 months to obtain approval for a contract and six to 12 months to obtain transportation approval, according to him.

Isaacson also said that contract extension would take longer and the decisions were usually around the end of contracts.

'€œThe government must decide on quicker contract extensions and support new oil and gas exploration in difficult areas,'€ he added.

Oil and gas companies averagely took between eight and 14 years to find oil in the country, according to Isaacson.

Indonesian Petroleum Association (IPA) chairman Lukman Mahfoedz shared the same view, adding that legal certainty, particularly on contract statuses for oil and gas block projects, remain the main challenge for many oil and gas companies operating in the country.

'€œThere are 20 oil and gas cooperation contracts [KKKS] which will expire in five years with no certainty whether they will be extended or not,'€ Lukman said during the 38th Indonesian Petroleum Association (IPA) convention and exhibition last week.

The contracts are of great importance, he added, because the 20 KKKS firms produced 635,000 barrels of oil per day last year or around 30 percent of the country'€™s total oil production that is currently facing major proudctivity issues due to ageing fields.

As previously reported, Chevron has asked the government to extend the end of the Makassar Strait PSC from 2020 to 2028, to match the other three PSCs that expire in 2028.

The Energy and Mineral Resources Ministry'€™s oil and gas director general Edy Hermantoro has said that the government would soon decide the extension of the contract and that the government has approved the Authorization of Financial Expenditure (AFE) for the project.