Indonesia awards new exporation blocks

To boost its declining production, Indonesia has awarded exploration rights for 11 new oil and gas blocks.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 4 -- To boost its declining production, Indonesia has awarded exploration rights for 11 new oil and gas blocks.

Evita Legowo, director general of oil and gas at the energy ministry, said, "The areas are promising, but we have to wait for the investors to do the exploration so we know the reserves."

The new awards include: South Block "A", North Sumatra (PT Renco, PT Prosys); East Pamai, onshore Central Sumatra (PT Nana Yamano); West Belida onshore South Sumatra (Orchard Energi, Bayu); Terumbu onshore and offshore Madura (Australia Worldwide Exploration Ltd).

The awards also include: Southeast Madura (PT Bama Bumi Santosa, PT Toba); Pasir, onshore East Kalimantan (PT Archipelago); S. Sesulu, offshore East Kalimantan (Hess); Kofiau, offshore West Papua (Biak Petroleum, Niko Resources); offshore West Papua (Marathon, Komodo Energy, Kumawa Energy); Cendrawasih, offshore West Papua (Esso, ExxonMobil, and Biak Petroleum); Northern Papua, onshore and offshore North Papua (Sarmi Papua, Asia oil)

Legowo announced plans to offer 24 oil and gas blocks in May. Most will be offshore blocks in the eastern part of Indonesia. The new round will be offered during the May 5-7 annual convention of the Indonesian Petroleum Association in Jakarta. Contracts for the 11 blocks awarded also are to be signed at the convention.

Meanwhile, Legowo said the Indonesian government believes it could find more oil and gas reserves based on historical data that Royal Dutch Shell PLC will return to Indonesia. Under a recent memorandum of understanding, Shell agreed to return all its exploration documents from before 1965. "We expect the data transfer will be completed in no more than 1½ years," said Legowo.

She said the government proposed that Stanvac and Caltex, now ExxonMobil Corp. and Chevron Corp., respectively, return their exploration documents from before 1965. Legowo said such historical documentation was expected to provide more information about oil and gas potential in the country. "It is possible that, based on the data, we will find new oil and gas blocks," she said.

Although the government has conducted its own seismic surveys, Legowo said the possibility exists that something may have been overlooked.

"Take the example of Cepu block. PT Humpuss had done exploration in the area, but it could not find big oil reserves. But ExxonMobil later on found a big reserve in the block," she said.

Indonesia is struggling to produce more oil from aging fields. In the first quarter of 2009, production averaged 946,000 b/d, down 14,000 b/d from the government's target of 960,000 b/d.

Last year Indonesia withdrew from the Organization of Petroleum Exporting Countries due to declining production and increased imports of oil.

Contact Eric Watkins at hippalus@yahoo.com.

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