Company Seeking Two ‘Exclusive’ Deep-Water Oil and Gas Blocks

The Jakarta Globe, Reva Sasistiya, March 11, 2009 

State oil and gas company PT Pertamina is hoping to exclusively secure two deep-water oil and gas blocks in the eastern part of Indonesia during the government’s next open tender for fields, the head of the state-owned company said on Tuesday. 

The government is planning to offer up to 20 oil and gas blocks this year. Major companies, like US-based Chevron, France-based Total and Japan-based Inpex, have shown their preference for deep-water projects, which, while more expensive to develop, also offer potentially higher levels of oil and gas reserves. 

Karen Agustiawan, Pertamina’s president director, said that if it succeeded in its bids for the blocks, the state company plans to operate the blocks alone and without cooperation from a major international partner. 

In a previous bid for the lucrative Semai V offshore block in West Papua Province, Pertamina, in a consortium with Royal Dutch Shell, lost out to New York-based company oil company Hess, with a total investment of $147 million. The block, according to upstream oil and gas regulator BPMigas, is estimated to have probable gas reserves equivalent to a billion barrels of oil. Pertamina protested the bid results, saying the Energy Ministry was “pro-foreign investor.” 

“We have evaluated the situation,” Karen said. “Should Pertamina be able to take 100 percent of shares, then we will take them,” she added, but declined to further explain the blocks’ location. 

Purnomo Yusgiantoro, minister of energy and mineral resources, said the ministry could award the company special privileges for exploration rights, which it is allowed to do under oil and gas laws, should it propose the bids by itself. “We will support Pertamina if it is the sole owner,” Purmono said. 

The ministry offered 31 new oil and gas blocks to contractors in October last year. It is expecting bidders to return their bid documents by the end of March. The government usually holds two rounds of regular tenders in a year. 

Evita Legowo, director general of oil and gas at the Energy Ministry, said the government would sign six coal-bed methane contracts out of 14 contracts initially planned in May. 

Indonesia is estimated to have total potential coal-bed methane reserves of 453 trillion cubic feet — the second largest in the world after China. Coal-bed methane has been attracting a lot of interest from investors. 

The first contract was signed with a joint venture company established by PT Medco E&P Indonesia and PT Ephindo for South Sumatra’s Sekayu block. 

This was followed by a contract with PT Ridlatama Mining Utama for East Kalimantan’s Bentian Besar block, and one with PT Samantaka Mineral Prima for Riau’s Indragiri Mulu block.