Indonesia eyes European, U.S. oil giants for investment bids
The Energy and Mineral Resources Ministry is seeking bids for 24 oil and gas blocks, one coal-bed methane block and one shale block, it said in statement on Monday. The government expects to get investors for at least half of the offered blocks, Deputy Minister Arcandra Tahar said, adding that the next round of offers may be in six months.
The areas being offered will include onshore and offshore assets and those not sold in tenders in the past three years, Tahar had said in an interview in Jakarta on Wednesday.
Indonesia is trying to lure billions of dollars of investments into its oil industry to reduce dependence on imports as production slumps from its aging fields. The path has not been easy. The country, once a major crude oil shipper in Asia, only managed to sell five blocks out of 10 offered in a tender last year. The government is targeting industry’s “big boys” such as Chevron Corp., BP Plc and ExxonMobil Corp., said Tahar, an oil and gas professional who lived in the U.S. for 20 years.
Tahar and ministry officials plan to meet oil company executives within a week after the auction announcement. Their first stop will be Houston, followed by Paris and Singapore.
“We will try to show them we have a new policy, a new fiscal regime, that’s going to be much better than the previous one,” Tahar said in the interview. “If you come and invest, the process will be simple and transparent. The message need to be conveyed clearly and loudly.”
The former member of the Organization of Petroleum Exporting Countries has switched to a so-called gross-split scheme for explorers from a production-sharing contract. The new regulation provides more certainty, flexibility and transparency for oil investors, Tahar said. His ministry has scrapped more than 50 regulations related to employment to refinery permits this year as it targets $200 billion in new investments over the next decade.
“With gross split, there is a certainty that you yourself count the split,” Tahar said. “If you are in early production, we are going to give better incentives, and phasing out over the cumulative production.” Explorers will get greater incentives if crude price is low and it will be reduced when prices move higher, he said.
Chevron, the second-biggest U.S. oil explorer, which has been operating in Indonesia for more than 90 years, is the country’s largest producer of crude oil, delivering approximately 40% of the national production from its operations in Sumatra and Kalimantan, according to its website. Exxon runs the Cepu block in Java.
Investors can access bidding documents from Feb. 19 to March 27 for direct offers, and until June 7 for regular tenders, the ministry said in Monday’s statement. The submission deadline for direct offers is April 4, and on June 19 for regular tenders, it said.