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Govt to conduct flexible oil bidding this year
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A small boat crosses in front of an oil rig as it arrives in Port Angeles, Washington, US, aboard a transport ship after traveling across the Pacific in this April 2015 file photo, with the Olympic Mountains in the background. Royal Dutch Shell confirmed on May 10, it would relinquish all but one of its federal offshore leases in Alaska's Chukchi Sea. Shell was the only company actively drilling in the Chukchi. (seattlepi.com via AP/Daniella Beccaria)
T
he government has announced plans to introduce a new tender process for oil and gas projects that will afford bidding investors greater flexibility.
The new mechanism is promised to be implemented and applied before the end of the year as part of government efforts to encourage oil and gas exploration in the face of a sluggish oil market.
The Energy and Mineral Resources Ministry's director for upstream oil and gas, Djoko Siswanto, said the new tender system would allow participants to propose the production sharing split and the height of the signature bonus.
"In 2015, we applied a non-negotiable ‘take it or leave it’ method for the sharing split. In 2016, the sharing split is open for bidding, as long as the government’s share after tax is larger than the contractor’s share," Djoko said at the closing ceremony of the 40th Indonesian Petroleum Association (IPA) convention and exhibition in Jakarta on Friday.
Likewise, the signature bonus for the government in 2015 bids was at the closest level to the requirement. In 2016, Djoko said, it would be negotiable in the bidding process with a non-zero bonus for the government.
He stressed, however, that tender participants had to pass a basic assessment on their compliance with administrative requirements and their technical and financial capability.
"The final assessment is a combination of a participant's proposed work program and their commitment, signature bonus and proposed sharing split," he explained.
In the first wave of tenders in 2016, the government plan to offer 15 oil and gas blocks. The figure might still change, based on the availability of new blocks to tender, Djoko said, however.
“Seven conventional blocks and one non-conventional block are offered via regular tender, while seven others will be through direct deals.”
The blocks offered through regular tender are South CPP in Riau, Oti in East Kalimantan, Suremana I in East Kalimantan, Manakarra Mamuju in East Kalimantan, South East Mandar in South Sulawesi and Kasuri II in West Papua.
Meanwhile, the seven blocks offered via direct deals are Bukit Barat in Riau Islands, Batu Gajah II in Jambi, Kasongan Sampit in Central Kalimantan, Ampuh in the Java Sea, Ebuny off the coast of Southeast Sulawesi, Onin in West Papua and West Kaimana in West Papua.
Earlier, the ministry's director general of oil and gas, IGN Wiratmaja Puja, said the ministry had prepared a number of incentives, including an extension of the exploration period, flexibility on the type of exploration and special incentives for exploration in deep sea and remote areas.
"We still have to hold discussions with other ministries on the tax holiday, as well as FTP [first tranche petroleum] and DMO [domestic market obligation] holiday," he said. (ags)
