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Vol. 226 No. 1 |
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| TONY SITATHAN, CONTRIBUTING EDITOR, SOUTHEAST ASIA |
Jakarta mulls tax modifications. Indonesia plans to modify its tax system to attract more foreign investment in the gas and oil sectors, said Vice President Jusuf Kalla during an international energy conference in Jakarta. The government may scrap import duties for equipment used in developing gas and oil areas jointly operated by the government and foreign partners, he added. Under an existing program, the equipment will eventually be owned by Indonesia.
Kalla also said that the government is examining ways to free companies from Indonesia’s value-added tax while they are exploring in the country. He did not give a schedule for the implementation of the planned measures. Increasing foreign investment in the gas and oil sector is crucial to efforts to boost Indonesia’s dwindling oil output.
Speaking of investment, Indonesia signed 15 production sharing contracts last month with companies, including Anadarko Petroleum, Unocal, Petronas and ENI. “The contractors have committed for exploration spending of around $200 million,” said Mines and Energy Minister Purnomo Yusgiantoro said.
Anadarko will explore the Madura III Block, and Petronas will work the Madura IV Block, both offshore northeastern Java. Italy’s ENI will explore the Bulungan Block offshore East Kalimantan, while Unocal will search the East Ambalat Block off East Kalimantan. The latter area is where Indonesian and Malaysian claims overlap. Petronas had said last September that its plans to develop two new deepwater blocks in the Sulawesi Sea might be disrupted by Indonesian claims to the same area. The rest of the contracts were signed mostly with local companies.
Hoping to break the logjam, Indonesian officials have asked state-owned Pertamina to reopen negotiations with ExxonMobil, in a bid to resolve a contractual dispute over developing a key oil field on the island of Java. “We have already (instructed) Pertamina to start renegotiating with ExxonMobil,” said Indonesian Coordinating Minister for the Economy, Aburizal Bakrie, during a briefing with reporters at an investment seminar held by the Indonesia-Japan Private Sector Joint Forum On Investment.
Bakrie has also spoken with Exxon-Mobil about starting negotiations with Pertamina, but he did not elaborate. ExxonMobil bought rights to Cepu field in 2000 from a company run by a son of Indonesia’s ex-dictator, Suharto. That firm obtained the rights to exploit the field from Pertamina under a technical assistance contract.
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Fig. 1. Indonesian officials are trying to resolve a dispute between ExxonMobil and Pertamina over Cepu field.
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Soon after that, ExxonMobil found large reserves that Pertamina had failed to locate during its own 30 years of exploration. Nevertheless, Indonesia has insisted that ExxonMobil share a portion of its find with Pertamina, in exchange for a 20-year extension of ExxonMobil’s contract over the area.
The current contract expires in 2010. The field lies on the border of Central Java and East Java, and has proven reserves of 600 million bbl, making it the largest Indonesian discovery since the 1960s. Indonesian President Susilo Bambang Yudhoyono had assured US President George W. Bush in November that he would seek immediate resolution of the dispute, but neither side has announced a breakthrough in the matter.
Thai activity thrives. Unocal Corp. will spend $580 million to boost exploration and production in Thailand next year, a 26% increase from its 2004 investment. “The investment will primarily be spent to double our crude production to 40,000 bpd next year,” said Unocal Thailand President Tara Tiradnakorn. “The investment plan was approved just a couple of days ago, and it is going to be the biggest investment of our 42-year presence in Thailand.”
Tara said about 60% of the 20,000- bpd crude production was sold domestically. Unocal, which has 16 Tcf of gas reserves in Thailand, would raise its gas sales by 20 Mcfd to 1.2 Bcfd in 2005, and to 1.5 Bcfd in 2006.
Unocal settles suit in Myanmar. Unocal Corp. confirmed that it has agreed to settle a lawsuit brought by Myanmar villagers, who accused the firm of complicity in human rights abuses, including slave labor, during the building of a pipeline. In an official statement, company spokesman Barry Lane said, “We have reached a settlement in principle, to settle the federal lawsuit. At the moment, negotiations are ongoing, and we have no more specific information.”
The lawsuit concerns construction of the $1.2-billion Yadana gas pipeline that runs from the border with Thailand into the Andaman Sea. Sources have said that the settlement will provide money to develop health care and educational programs, as well as protect the rights of people living in the region of the pipeline.
Meanwhile, Myanmar has signed contracts with a consortium of two Chinese firms and one Singaporean company, allowing the group to explore two offshore blocks in the western and southern waters. Officials from Myanma Oil and Gas Enterprise (MOGE) and the consortium signed PSCs for Block A-4 off western Rakhine State and Block M-10 in the Gulf of Martaban.
The consortium comprises China National Offshore Oil Co. (CNOOC) Myanmar Ltd., China Huanqiu Contracting and Engineering Corp., and Golden Aaron Pte. Ltd. of Singapore. MOGE’s report gave no further details of the contracts. According to MOGE, Block A-4 covers more than 10,000 sq km, and it is in the vicinity of two blocks that are considered to have high potential for hydrocarbon finds.
The 15,534-sq-km Block M-10 is between Yadana gas field and Yetagun field, both in the Gulf of Martaban off the Tanin-tharyi coast in southern Myanmar. Combined estimated reserves there are 9.7 Tcf of gas.
Myanmar has 24 offshore gas fields, with 11 in the Gulf of Martaban, seven off the Rakhine coast and six off the southern Tanin-tharyi coast. About 40% of the country’s export earnings come from gas exports to Thailand. 
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