US-based oil giants ExxonMobil Corp. and Hess Corp. Wednesday won new oil and gas exploration rights in eastern Indonesia and pledged a total commitment of US$66 million to do so over the next three years.

The world’s biggest oil producer Exxon, through its subsidiary Esso Exploration International Ltd, won the rights to explore the Cendrawasih block offshore Papua.

It will carry out exploration with a partner, Biak Petroleum LLC. They will invest $40 million in the first three years.

Hess, the fifth biggest US oil producer, won exploration rights in the South Sesulu block, off Kalimantan. For the first three years of exploration, it is committed to invest $26 million.

The two companies were among the winners of 11 new oil and gas blocks announced by the Energy and Mineral Resources Ministry on Wednesday.

The government expects to draw in total investment of $189 million into these 11 blocks,  ministry’s director general for oil and gas Evita H. Legowo said.

She said the investment for the first three years exploration would be for geological and geophysical studies, seismic surveys and drilling of exploration wells.

The government will also receive another $21.65 million in the form of signatory bonuses, she added.

The 11 blocks were offered under a so-called direct offer mechanism in which oil and gas companies may propose to the government to carry out a joint study in blocks which they are interested in. During any subsequent tender process, these companies will get the first priority to develop the blocks.

The 11 blocks were offered in December last year. The government initially offered 15 blocks. One of the blocks did not attract any investor and other three blocks attracted some oil and gas companies, but none of them met the government’s technical criteria.

During the announcement, Evita reminded oil and gas company’s representatives to submit their confirmation by May 1 at the latest.

The contracts are scheduled to be officially signed on May 5th, during the opening of the 33rd annual conference and exhibition of the Indonesian Petroleum Association (IPA).

The event  will be held at the Jakarta Convention Center (JCC) from May 5 to 7. Also in the event, the government will open a tender for 24 new oil and gas blocks.

Indonesia is struggling to pump more oil from aging fields. Declining oil production forced the country to withdraw last year from OPEC membership as Indonesia is no longer a net exporter of oil.

This year, Indonesia set the oil lifting target at 960,000 barrel oil per day (bopd), but the realization of oil lifting in the first quarter of this year only reached 946,000 bopd.

Commitment *

1. South Block “A”    Consortia of PT Realto Energi Nusantara    $5.18m

& PT Prosys Oil&Gas Int’l

2. East Pamai    PT Nana Yamano Technik    $6.35m

3. West Belida    Consortia Orchard Energy    $5.76m

Pte Ltd & PT Bayu Energi Lestari

4. Terumbu    Australian Worldwide Exploration    $9.50m

5. South East Madura    Consortia PT Bama Bumi Sentosa    $12.00m

and PT Toba Sejahtera

6. Pasir    PT Archipelago Resources    $7.75m

7. South Sesulu    Hess (Indonesia South Sesulu )    $26.00m

8. Kofiau    Consortia Biak Petroleum LLC    $24.54m

& Niko Resources (overseas IX)

9. Kumawa    Consortia Komodo Energy    $25.30m

LLC-Marathon Indonesia New Ventures

Ltd-Indonesia Kumawa Energy Ltd

10. Cendrawasih    Consortia Biak Petroleum LLC    $40.00m

& Esso Exploration Int’l Ltd

11. Northern Papua    Sarmi Papua Asia Oil Ltd    $26.70m

Total        $189,08m

*  the commitment is for the first three years of exploration

**total signing bonus US$21,650,000

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