Offshore staff
SINGAPORE -- The Jakarta government is working on a policy to increase local company participation in Indonesia's oil and gas sector, and increase the resulting benefits to the local communities.
Luluk Sumiarso, director general of oil and gas at the Energy and Mineral Resources Ministry, says the policy will be compiled in the 2006-2009 blueprint for the industry, which currently is dominated by foreign groups.
The decision for a policy and strategy review comes a week after an indigenous industry group called for opportunities to increase its share in the country's oil and gas sector.
Luluk says the government will assess the local ownership level of the Indonesian oil and gas fields to determine the percentage of the shares destined for local companies.
A review of the production sharing contract also will be compiled into the blueprint. Among other things, it will cover reserves, production, exploration technology, and environmental issues.
Industry observers say Indonesian policy makers will have to be careful in a review of the oil and gas sector, as foreigners have been disappointed with the political instability in the country.
Lack of fresh investments to explore technologically challenging deepwater basins, has resulted in Indonesia's daily crude oil production dropping to about 1 MMb/d this year form the peak of 1.6 MMb/d during the peak of the 1990s, observers say.
A handful of Indonesian companies are exploring oil and gas fields, but on limited budgets and mostly in fields with depleting reserves, say observers. The Indonesian industry also lacks investment funds and technologies for mega field developments, they say.
Foreign companies, operating in Indonesia for more than a century, called for more investment-friendly laws and regulations to encourage fresh investments in the exploration and production sector.
The PSC, which offers 15% of oil and 30% of gas production after deducting operating costs, is one area foreign operators want to address before further exploration of the virgin deepwater basins, say observers.
The Indonesian PSCs are no longer attractive, though in some cases the production share has been increased to 40% for gas in new frontiers and deepwater areas, the observers point out.
8/3/06
