EMR Ministry: Oil and Gas Blocks to be auctioned Next Year are revised

KATADATA - Energy and Mineral Resources (EMR) Ministry has revised the target of oil and gas blocks that are to be auctioned next year. Initially, the ministry has targeted to have 21 oil and gas blocks to be auctioned next year. But now, the target has been revised to be only 10 blocks. 

“Our target is minimum 10 blocks for next year, which consists of eight conventional blocks and two nonconventional blocks,” Djoko Siswanto, EMR Ministry’s upstream oil and gas business development director, said to Katadata, Tuesday (24/11). 

In the last two days, the ministry is still discussing about the auction of oil and gas blocks for next year. There is a need for a thorough preparation to offer the oil and gas blocks because all this time there were many blocks that were not sold. 

Last year, out of 21 oil and gas blocks that were offered, only 11 were sold. Meanwhile in this year, out of eight conventional oil and gas blocks, only four of them were bought. The three others are still being auctioned. 

Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) deputy chief M.I. Zikrullah said that the oil and gas investors are not so enthusiastic in participating to develop the oil and gas potential in Indonesia. In the last several months, there have been several oil and gas blocks that were returned to the government. 

The contractors felt that the blocks are not economically efficient. They insisted to return the blocks to the government, even though they have spent up until US$ 500 million in investment. And when they were returning the blocks, they still must pay US$ 12 million because they did not fulfill their commitment. 

This kind of situation is the reason why investors are reluctant to invest in the upstream oil and gas activities in Indonesia. And moreover, the rules that the government set often change a lot. “The competitiveness of Indonesia, compared to other countries, is very low. If the regulation is hard, then they [the investors] will run to the neighboring countries,” Zikrullah said. 

Djoko has also admitted that the low oil price and the inconsistency in the regulation have made the investors to be reluctant in investing their money in Indonesia. And to make it interesting for the investors next year, the government has prepared several incentives, like the fiscal incentives, deregulation of permits, and by providing a more comprehensive data for the investors. 

EMR Ministry has conducted a data screening to know the oil and gas reserve of each existing blocks by using a new and advanced technology called the satellite scan solution. With this technology, the data of oil and gas reserve can be seen in a more detailed way.