Indonesia speeds up licensing process to seize billion dollar O&G projects

Indonesia seeks to speed up licensing process for companies developing oil and gas projects, according to a decree issued by the energy minister and obtained by Reuters on Wednesday.

The decree aims to boost production of oil or gas given the potential unexploited resources in Southeast Asia's biggest economy. The decree said that, "Oil and gas contractors must accelerate proposals for development plans after (oil or gas) finds” and added that, “The contractor must start development activities within 180 calendar days after the proposal is agreed.”

In October last year, Indonesia confirmed to offer oil and gas blocks for tender worth US$10 billion, following a delay brought about by discussion of cost recovery arrangements in the country’s oil and gas industry. But 75 percent of the 40 oil and gas blocks offered for bids last year failed to find investors.

Indonesia has struggled to attract fresh investment to develop new fields, partly due to uncertain regulations and tortuous red tape. Investors had their concerns, arising from criticisms that the PSCs are not commercially viable arrangements. Recently in an earlier interview, Suwito Anggoro, present director of PT Chevron Pacific said, “If Indonesia´s oil and gas industry is a restaurant, maybe this is the right time to offer menus other than the PSC”

There may never be a better time with a better team for the Indonesian top technocrats to think out of the box and take a new track. Immediately after his 2009 re-election, President Susilo Bambang Yudhoyono appointed reforming, energetic and efficient career professionals, veering away from professional bureaucrats into key upstream oil and gas portfolio.

The decree reflects Indonesia’s vow to increase output to 965,000 bpd this year from 949,100 barrels per day (bpd) of crude oil and condensate in 2009. According to the decree, the contractor must produce oil or gas at least 2 years after development plan is agreed, versus the previous upstream regulation stipulating that oil contractors have 6 years for exploration and that can be extended by another 4 years.

The challenge, however, continues, as output from the country's older production wells was declining by about 10-15 percent per year, whilst unexploited fields are also in more remote areas or under deep water, requiring high levels of investment and specialised technology.

Indonesia still prides itself of proven and potential oil reserves of 8.3 billion barrels, but drafting, negotiating and creating more efficient, commercially viable contracts and agreements are critical in this volatile environment.

E&P Sharing Contracts and Agreements 2010 Power Forum held in Jakarta on 27-29 April 2010 was launched to discuss this critical issue and will be bring to the fore the drafting, negotiation and implementation of next generation contracts. Regulators, oil and gas players and contractors and important players in the E&P sector will convene in Jakarta to address this business critical issue.

The high-level forum will support the theme, Effective Production Sharing Agreements, Engagement Strategies and Partnerships Models for NOC-IOC-SC Adapted for the New Economy.

To register or enquire, information is available on www.arcmediaglobal.com/epcontracts10.

The Center for Energy Sustainability and Economics is a private-sector energy think tank which brings top executives together in communities of learning and practice, acts as a catalyst for generating high-value energy business insight, and channels top expertise to where the industry needs it most. The center is currently affiliated with Arc Media Global as its official promotion agent for its programmes and services, which include industry meetings, members-only roundtables, business research and high-value consulting.

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This release was published on openPR.