Eric Watkins
Senior Correspondent
LOS ANGELES, Jan 19 -- The Indonesian government plans to change clauses in oil and gas contracts to attract investors to difficult areas of the country, such as eastern Indonesia.
Kardaya Warnika, who heads the Implementing Body of Upstream Oil and Gas Activities, said the amendments involve granting greater shares of production to contractors.
He said no oil and gas contractors would invest in eastern Indonesia if they received the same production shares as those offered in western Indonesia.
Warnika also said the government would exempt oil and gas contractors wishing to invest in eastern Indonesia from drilling commitment fees and would reduce their exploration period from 6 months to 2-3 months.
The announcement coincided with the arrival of a delegation from the US-Indonesia Business Council, which said it hopes the government will improve the investment climate.
Robert W Haines, international relations manager at ExxonMobil Corp., who co-led the council's 5-day visit, said the government's plan to raise electricity tariff rates could attract additional investment as power prices become more viable.
"There are several US companies that have an interest in investing in the power sector in Indonesia," he said.
"Allowing the price of any commodity—whether it's electricity, gas, or oil—to come up to market prices will help in the investment decision," Haines said.
Contact Eric Watkins at [email protected].
