Indonesia plans to offer 40 blocks

The Indonesian government is planning to offer 40 additional blocks this year through tender calls or on directly negotiated offers. The move is designed to raise the rapid decline in domestic crude oil production, which last year fell to 1.01 million b/d, below the government's 1.05 million b/d target.

Offshore staff

JAKARTA, Indonesia -- The Indonesian government is planning to offer 40 additional blocks this year through tender calls or on directly negotiated offers. The move is designed to raise the rapid decline in domestic crude oil production, which last year fell to 1.01 million b/d, below the government's 1.05 million b/d target.

R. Priyono, the director general for upstream commercial oil and gas development at the Energy and Mineral Resources Ministry, says the plan to offer more blocks took shape when only nine blocks out of the 20 were awarded in early March.

Indonesia is hoping to attract $1 billion in three-year exploration commitments from the 40 additional blocks in addition to the $411 million in three-year commitments secured for the recently awarded blocks.

Indonesia signed 18 production sharing contracts last year.

In 2005, Indonesian crude oil production fell to 1.06 MMb/d in 2005 compared with the 1.6 MMb/d peak in the 1990s. The shortfall in domestic gas supply has affected Indonesia's industrial market, particularly steel mills and fertilizer plants.

Minister of Energy and Mineral Resources, Purnomo Yusgiantor, says the government will renegotiate long-term LNG contracts with buyers in South Korea, especially from the new Tangguh LNG complex, which is still under construction.

The government is also trying to reduce its Tangguh LNG contract commitments to the US West Coast market to cope with existing long-term lucrative contracts with Japanese utilities operators.

Purnomo says the aim is to revise the LNG prices with new buyers.

3/7/2007

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