We want predictability, say mining firms

Ika Krismantari, The Jakarta Post, Jakarta

If one asks a mining firm what it wants more than anything from the upcoming new mining law, the likely answer will be "predictability".

"We want predictability. If something is predictable, we know the risks we will be taking. If you don't have predictability, your business is not going to move forward," Australian senior trade commissioner Rod Morehouse told The Jakarta Post on Tuesday.

He was speaking on the sidelines of a seminar on the future of Indonesia's mining industry, organized by the Australian Trade Commission.

According to Morehouse, however, the mining bill, which has been under deliberation by the House of Representative for more than a year, fails to address investor concerns over predictability and certainty, leaving them unable to forecast the costs and risks they are likely to face.

"Will the law be lex specialis or not? ... Will the license system guarantee both exploration and exploitation rights?

"If the country demands complete downstream manufacturing, will this include smelting, refining or even component manufacturing ... These are not yet a hundred percent clear," Morehouse said.

The seminar was held as part of the Australian Mining and Petroleum Exhibition and Conference 2007 (Ozmine 2007), which took place on the same day, and was participated in by 27 Australian mining and oil companies showcasing their latest projects and technologies.

Morehouse said that nine major Australian mining companies, representing a combined investment of more than US$10 billion, were currently waiting to see whether the new mining law -- in addition to the investment and taxation laws -- would address their concerns.

Among the nine firms were mining giant Rio Tinto, which was currently engaged in negotiations with the government for a Contract of Work for a nickel project in Sulawesi worth some $2 billion.

The others included mining heavyweight BHP Billiton, which had invested $77 million since 1998 on seven coking coal plants here, and Oxiana, an international mining and exploration company that was due to set up a joint venture with the Indonesian Kalimantan Gold Company.

Responding to the debate over the issuance of licenses and permits by local governments, as proposed under the new bill, Rio Tinto managing director Charlie Lenegan suggested the adoption of the system applied by the Western Australian government.

"If it involves small-scale projects, then the permits could be handled by the local government. But if it involves large-scale and long-term projects, the permits would be arranged by the central government," Lenegan said.

Many investors have voiced similar concerns over the granting of a bigger role to local government, fearing it would only further complicate the bureaucracy they have to go through to get their businesses going.

The government has set itself the target of having the new mining law on the statute books by March.

Lampung on target to become major biofuel center

Oyos Saroso H.N., The Jakarta Post, Bandarlampung

Lampung is set to become a major national production center for biofuels during the next four years, an official says.

Four local companies are spending more than Rp 860 billion (US$90.52 million) on bioenergy projects in the province, while a South Korean firm plans to invest more than Rp 90 trillion to build a bioethanol refinery.

A project worth Rp 184 billion and managed by PT Acidatama Lampung Chemical Industry in Central Lampung was approved by the provincial administration in 2005.

In 2006, PT Bio Energi Ind. invested $900,000 to build a plant in Tulangbawang regency. That year, three other local firms -- PT Sumi Asih in Bandarlampung, PT Medco Ethanol in Lampung and PT Luhur Prakarsa Maju Dinamika in North Lampung -- began investing a total of Rp 675.6 billion.

Meanwhile, South Korean's PT CSM Corporation has signed a memorandum of understanding with the Lampung administration to invest Rp 90 trillion in the province to build an ethanol refinery in North Lampung.

CSM has already planted a 20,000-hectare plot of land with cassava -- 10,000 ha in Way Kanan, 5,000 ha in Tulangbawang and another 5,000 ha in North Lampung.

The head of the Lampung Investment, Culture and Tourism Promotion Office, Syaifullah Sesunan, said the interest shown by investors indicated the province's potential and that foreign investors' trust had improved.

"We intend to become the center for biofuel in Indonesia. Large companies in Lampung such as PT Sugar Group, which has been producing refined sugar, and the PT Perkebunan Nasional VII state plantation company have built biodiesel and bioethanol plants, along with foreign investors," Syaifullah said on Monday.

Lampung Research and Development Agency head Rellyani was optimistic that biofuel production in Lampung could easily meet 10 percent of the province's energy demands as stipulated in a presidential decree on fuel supply.

"Lampung is estimated (currently) consume around 43,000 kiloliters of bioethanol annually, while (biofuel) production capacity could reach 740,733 k/lt a year," Rellyani said.

"We're confident Lampung could become a bioethanol producing center and supply fuel to the western part of the country, particularly Sumatra and Java," she said.

Rellyani estimated local demand for biodiesel at 97,597 k/lt a year, "while production of biodiesel is projected at around 128,000 k/lt annually. This shows a surplus in biodiesel production", she said.

She said Lampung was more suited to producing bioethanol than biodiesel.

"There is a huge amount of cassava and sugarcane here, and the soil conditions are also suitable to grow these crops."

"Biodiesel is made from palm oil and the jatropha plant. Most farmers prefer to turn palm oil into crude palm oil than biodiesel, while supplies of jatropha are still limited at the moment."

Lampung has a plantation area covering 543,800 hectares, producing 367,840 tons of palm oil a year, 5,386,062 tons of cassava per ha annually and 7,101,600 tons of sugarcane yielding 340,876 tons of molasses annually.

The government wants biofuels to make up 10 percent of total energy production by 2010, however, current production levels are well below this amount.

Total levels will increase, however, with the work of PT Medco Ethanol Lampung (MEL), which has been operating in North Lampung since October, and is targeting production of 60,000 k/lt of bioethanol annually.

The country's first bioethanol plant is currently in the design and construction planning stage. Workers are building access roads to the factory site and securing partnerships with cassava and sugarcane suppliers.

PT MEL project director Panya Siregar said the company planned to invest around $4.12 million in the plant through a project funding scheme. The plant is expected to employ 150 workers and be backed by a supply of around 13,000 ha of cassava plantations, providing around 600,000 working days for farmers annually.

"The factory's presence will have positive impacts on supporting sectors, such as transportation, and create a new distribution network for cassava and sugarcane farmers," Panya said.

The company will also use modern technology to benefit from biogas produced from by-products, he said.

"The factory is designed to produce 180 k/lt of bioethanol daily or an equivalent of 60,000 kiloliters annually. In its initial stage, the company is planning to produce high quality ethanol for industry, especially for overseas markets, such as Singapore and Japan," Panya said.

PT Indosat to open tender to build new satellite

Jakarta (ANTARA News/Asia Pulse) - Publicly-listed telecommunications company PT Indosat will soon open a tender to build a new telecommunications satellite.

Nine companies from various countries have indicated interest in building the Palapa D, to replace Palapa C2, which will end its service in 2011, company director Wityasmoro Sih Handayanto said.

Handayanto said the new satellite was to be launched in 2009 and would have a slot at an orbit of 113 degrees east longitude.

The Indonesian Satellite Association said a telecommunications satellite will cost around US$200 million.

Australian coal firm to set up factory in C. Kalimantan

Palangka Raya, Central Kalimantan (ANTARA News) - PT Lahai Coal, BHP Biliton`s subsidiary based in Kalimantan, said it will invest US$50 million in construction of a coal factory in Muara Teweh, Central Kalimantan, a spokesperson said.

"The coal factory will be built on 4,787 hectares of land. Hopefully, it will begin producing coal in the last quarter of this year," PT Lahai Coal director Indra Diannanjaya said here at the weekend.

The factory would have an initial production capacity of 720,000 tons to 1 million tons per year, he said.

The factory would be built in Haju Block in Maruai I and Maruai II villages in Laung Tuhup district.

Based on the contract of work, PT Lahai Coal`s initial concession area covered 46,620 hectares, part of which is located in Barito Utara district.

Indra said his office had conducted a feasibility study and intensive exploration activities since 2000 before deciding to enter the construction phase.

BJP Biliton claimed it had spent $77 million on the feasibility study and exploitation activities as well as on community development programs in Central Kalimantan and East Kalimantan.

He predicted that the block holds coal deposits of 4 million tons consisting of cooking coal and thermal coal.

"We will produce the two kinds of coal with a composition of 60 percent of cooking coal and 40 percent of thermal coal. The coal will be exported to France, Italy, Japan, Korea, and Thailand, among others," he said.

PT Lahai Coal will transport coal products either by land or river, namely Barito river using barges from Muara Tuhup port to the offshore port.

Andalas opens new cement packing unit and port terminal in Aceh

The Jakarta Post, Jakarta

PT Semen Andalas Indonesia, a subsidiary of French cement-maker Lafarge, inaugurated its new cement packing unit and port terminal Thursday in Lhoknga, Aceh Besar regency, Nanggroe Aceh Darussalam province.

The inauguration ceremony was attended by Industry Minister Fahmi Idris, Aceh Governor Irwandi Yusuf, Investment Coordinating Board chairman M. Lutfi, the co-president of Lafarge's cement business, Guillaume Roux, and the president director of Lafarge Cement Indonesia, Marcel Cobuz.

"As part of post-tsunami recovery efforts, Lafarge has invested US$17 million on building this modern packing unit and its port facility," said Cobuz.

The new unit is equipped with two rotary packing machines that are capable of packing up to 3,000 tons of cement per day.

Lafarge has also started work on the reconstruction and upgrading of its tsunami-damaged cement plant, including a coal-fired power plant, in Lhoknga Aceh.

The upgraded facility will allow Semen Andalas to produce 1.6 million tons of cement annually. The project is expected to be completed in the second half of 2008.

The total investment of $150 million is being financed from the reinvestment of the insurance claim, shareholders funds and external loans.

In addition, Lafarge, together with its partners, has completed the third phase of a housing project and handed over 63 homes to the beneficiaries as part of its commitment to providing 274 houses for about 800 inhabitants in Lamkruet village, one of the areas worst hit by the devastating tsunami in December, 2004.

The project, which started in the second half of 2005, will be completed in the second half of the year.

"To date, we have delivered 124 homes and another 93 houses are under construction out of a total of 274," said Corbuz.

Government to form team for intensifying talks on Papala Ring

Jakarta (ANTARA News) - The government is to set up a team to intensify a discussion about a concept on Palapa Ring`s broad band fibre optic project worth US$1.517 billion, which would go to a tender in October, 2007.

"The team will be formed late January, 2007, with the early task in February, 2007, to study the Palapa Ring`s business model," spokesman for the Post and Telecommunications Directorate General, Gatot S. Dewa Broto, said here Friday.

Gatot said the team was expected to intensify a discussion about the substance of the concept on the Palapa Ring project, namely, a business model, formation of a consortium, incentives and the government`s authority in the concept.

After the formation of the team, the government would hold inter sectoral meetings in March, 2007, formation of a consortium in May, 2007 and draw up a fibre optic network design in detail in June, 2007, he said.

The Palapa Ring project was designed based on a feasibility study to decide an optimum design in anticipation of the telecommunication traffic development in the future, he said.

The total length of the submarine fibre optic cable is 35,280 kilometers and the inland one is 20,737 kilometers.

About 15,000 kilometers of the existing fibre optic cables have been established by some operators (telecommunication company PT Telkom, PT Excelcomindo, PT Indosat and PT Comnet Plus) and they were expected to be integrated with the Palapa Ring project.

"The need of long fibre optic cables demands a comprehensive concept on national broad band network to lower the cost per Mbps. It is expected to become a national network integrated to the existing one," he said.

The companies interested to take part in the tender of the mega project are PT Telecomunikasi Indonesia, Bakrie Telecom, and PT Wireless Indonesia (WIN), Aqela and PT Potensi Bumi Sakti.

Pertamina sheds corrupt practices, earns billions

Riyadi Suparno, The Jakarta Post, Jakarta

Once a symbol of corruption, state oil firm Pertamina has embarked on an internal reform program under new leadership and has reaped billions of dollars in investments to double its oil and gas output.

Speaking to the media here Thursday, Pertamina President Ari H. Soemarno acknowledged that his company used to be a cash cow for those with political connections, but he insisted those days were over.

"As someone who has been working in Pertamina for years, I'm also responsible for those poor practices in the past. But now, I'm also determined to transform Pertamina into a competitive, modern and respected company," Ari said.

He said he had launched the internal transformation through 27 "breakthrough projects", including reducing the rampant leakage of fuels during transportation, increasing efficiency at the company's many ports and ridding its fuel depots of white collar thugs and thieves.

Within their first three months, he said, these projects had brought in an additional US$15 million.

The company has also worked to revamp its gas stations to better serve costumers.

"With the arrival of Shell and Petronas in the market, we have to improve the look and management of our gas stations. If Shell and Petronas have convenient stores and beautiful female attendants to serve customers, while our gas stations are manned by people with dirty clothes, how can we compete with them?" Ari said.

Pertamina will also work with multinational oil and gas companies to enhance its downstream businesses; for example, it will partner with SK Corp to build a lubrication oil plant in Dumai, Riau, and team up with Shell in the aviation fuel sector.

Ari said the company plans to more than triple its investment in the downstream sector to Rp 3.7 trillion (US$410 million) this year from Rp 960 billion last year and Rp 1.3 trillion in 2005.

He added that Pertamina would deepen its involvement in the upstream sector as well, which he said promised bigger returns.

"The upstream is our value creator, while the downstream is our value enhancer. So we have to be strong in both," he said.

In the upstream sector, Ari said Pertamina would invest a hefty Rp 10.1 trillion this year, a jump from Rp 3.5 trillion last year and Rp 3.9 trillion in 2005.

With that high investment in the upstream sector, Pertamina aims to double its oil and gas output from its current level of 235,000 barrels of oil equivalent per day within the next four years.

"So our total investment plan for this year would be about Rp 14 trillion (US$1.5 billion). That's still small, compared to our friends overseas. Petronas, for example, invests about $5 billion a year," Ari said.

He noted that most of the money for investment this year would be taken from retained earnings. Last year, Pertamina booked a profit of Rp 21 trillion. About Rp 12 trillion of that will be paid as shareholder dividends to the government, and the remainder retained.

This year, Pertamina, with total assets of around Rp 360 trillion, aims to book a net profit of Rp 23 trillion.

Pertamina's books have not been thoroughly reported on since the company's corporatization a few years ago. A government ordered Ernst and Young audit is still in progress.

2011: Methane Gas from Coal to Be Substantially Produced

Friday, 26 January, 2007 | 15:30 WIB

TEMPO Interactive, Denpasar: The government is working on a pilot project and preparing an agreement of a partnership contract on coal bed methane production. It is targeted that production will be started in 2011.

A member of the special staff of Energy and Mineral Resources of Technology and Mineral Resources Division Evita Soewito said that the pilot project with Medco has been in operation since 2003 in South Sumatera―was optimized in 2006. In 2003, there was only one exploration well. One well was added in the following year, and completed in 2006 with three wells.

In fact, for development, it requires five wells minimally. Each well will cost around Rp4 billion. “Because of a lack of funds,” she said in a workshop of Developing and Exploiting Coal Bed Methane at the Oil and Gas Working Area, at Denpasar, Bali, yesterday (01/25).

Evita said she was optimistic that next year the agreement can be signed. “Ten companies are already interested,” he said without mentioning the companies in detail.

Coal bed methane is an alternative energy that resembles gas in layers of layers of coal . Methane potential is quite large, reaching 453.3 TCF (trillion cubic feet).

About 50 percent of the potential is located in East Kalimantan. “They are twice as large as gas reserves on earth,” said Head of Oil and Gas Executing Body Kardaya Warnika.

Director General of Oil and Gas at the Department of Energy and Mineral Resources Luluk Sumiarso guaranteed that the working area inventory will be set up this year. Pertamina may obtain the special right if it can prepare the working area. If Pertamina does not request this, the government will hold an auction.

Harun Mahbub

Chinese company interested to build Batam-Bintan bridge

Batam, Riau (ANTARA News) - The China Railway Company Corporation (CRCC) was interested to build a bridge to link Batam and Bintan islands in Riau province, CRCC`s Group Chairman Jeffry Goh Coo Tong said.

"We have been long studying it and we are interested in it," Tong told ANTARA here Thursday.

The company has prepared US$350 million to set up the bridge, Tong said. "That is the initial amount. The amount in the next stage is not limited," he said.

Meanwhile, spokesman for the Batam Authority Dwi Djoko said the authority had yet to open tender for the construction of the Batam-Bintan bridge.

"It`s no problem that they have prepared the fund but anyone has to win a tender first to build the bridge," Djoko said.

He pointed out that an open tender was needed to decide a company which would contruct the bridge. "The tender is expected to be opened this year," he added.

Djoko said the CRCC was not the only company which was interested to set up a bridge that would link the two islands as there were also several Malaysian companies that wanted to do so.

In the meantime, spokesman for the Riau provincial administration Muhammad Nur said although the investment in the bridge construction project would be handled by the Batam Authority there should be coordination between the provincial administration and the Bintan district administration.

"It is not only the Batam Authority but also the Bintan district administration which is responsible for the six-kilometer long bridge project," he said, adding that the provincial administration should also think of the supporting infrastructures in Batam and Bintan.

With the presence of the bridge, the trip from Batam to Bintan and vice versa would take only about ten minutes. Local people have so far taken about an hour by ferry to ply the the Batam - Bintan route.

Indonesia to tender for 6 toll roads worth rp17 trln

Jakarta (ANTARA News) - The government is planning to hold tenders for six toll road links worth a combined total of about 17 trln rupiah this year, Parlindungan Simanjuntak, deputy head of the toll road regulatory body, said.

The links comprises four sections of road totaling 62 kilometers worth 9 tlrln rupiah in the Jakarta outer ring road project, phase 2. The other two are a 177-km toll road from Solo in Central Java to Ngawi in East Java, and from Ngawi to Kertosono in East Java. These two may cost around 8 trln rupiah.

Simanjuntak said at least three investors have pre-qualified to bid for the links in phase 2 of the ring road project.

He, noted though that the bidding will only be launched after the Ministry of Finance has issued a decree on government support, that may include a risk-sharing arrangement on land acquisition.

On the other two links, he said only two investors participated in the pre-qualification process and the regulations stipulate that for a tender to proceed at least three bidders must participate.

However another potential bidder has now come forward.

"Now we have got a third participant, PT Astratel Nusantara," he was quoted by XFN Asia as saying.

Lafarge Indonesian unit starts reconstruction of cement plant

Jakarta (ANTARA News) - PT Semen Andalas Indonesia, a unit of Lafarge SA of France, said it has started reconstruction of an upgraded cement plant that will have capacity of 1.6 mln tons per annum.

The plant is located at the firm's old facility in Lhoknga, Aceh province, which was devastated by the tsunami that struck the province in 2004.

The company said it has also launched the operation of a cement packing unit and port in Lhoknga that costs it 17 mln usd.

It said total investment for the packing terminal, the new 1.6 mln ton cement plant and a coal-fired power plant amounts to 150 mln usd.

The funding will come from insurance claim, shareholders fund and external loan, the company was quoted by XFN Asia as saying.

Mining Companies Asked to Increase Production

Thursday, 25 January, 2007 | 15:23 WIB

TEMPO Interactive, Jakarta: The Department of Energy and Mineral Resources has asked that three gold and copper mining companies increase production.

The three companies are PT Freeport Indonesia, PT Inco and Newmont Batu Hijau.

According to Marpaung, Director of Mineral and Coal Exploitation Management at the Department of Energy, the request was based on the state budget working plan at the beginning of January.

“Gold, nickel, copper and coal prices are increasing,” he told Tempo yesterday (01/24).

Gold prices are between US$550 and US$600 per ounce, while copper prices are around US$3.1 per pound.

Marpaung has compared these to last year when copper prices averaged US$2.8 per pound and gold between US$425 and US$430 per ounce.

He went on to say that Freeport’s capacity is 300,000 tons of concentrate per day but it is currently only producing an average of 240,000 tons of concentrate per day.

“What is most important is that produces the maximum that it can, raising production up to 300,000 tons per day if it can,” said Marpaung.

He explained that Freeport was currently examining the request using by considering investing in equipment to double up production, as well as environmental and job safety factors.

“This request has been delivered to Freeport and the company has agreed to increase its production,” said Marpaung.

Spokesperson for Freeport Indonesia Mindo Pangaribuan told Tempo that Freeport has always attempted to improve its performance in terms of production.

He acknowledged of still being uninformed about the said request from the government.

“I cannot comment on matters that are still being discussed with the government,” said Mindo.

NIEKE INDRIETTA

Seventeen Investors Interested in Drinking Water Project

Thursday, 25 January, 2007 | 17:23 WIB

TEMPO Interactive, Jakarta: A total of 17 investors are interested in investing in a drinking water project at Tangerang.

This project is one of the 10 projects that the government offered at the 2006 Infrastructure Summit.

Bambang Susantono, Deputy Coordinating Minister for the Economy from the Infrastructure Division, explained that the Tangerang drinking water project will be divided into two locations: the western and the eastern sides of Cisadane River—one project for each respective location.

“Both have passed the pre-qualifying phase,”said Bambang after attending the Indonesian Infrastructure and Resources Conference at Dharmawangsa Hotel, Thursday (01/25) in Jakarta.

The 17 investors, according to him, consist of 12 national investors and 5 foreign investors including Malaysia (Asia Engineering/Acuatico), Singapore (Taico) and Japan (Mitsui).

According to Rahmat Karnadi, Head of the Support Body for Developing Drinking Water Supply System, said previously that the projects would need funding of Rp400 billion and would later be used for meeting drinking water needs of 900 liters per second in Tangerang over the next 25 years.

RIEKA RAHADIANA

Busway contract out for tender

The Jakarta Post, Jakarta

The Jakarta Transportation Agency is holding a tender to select a consortium to operate the four new busway corridors.

Agency head Nurachman said Tuesday the evaluation of the bidders' credibility and performance was still underway.

"Only one will be named the winner. It will operate corridors 4 to 7, including the management of personnel and busway operations and maintenance," Nurachman said.

The four new corridors, to be launched on January 27, will link Pulogadung in East Jakarta with Dukuh Atas in Central Jakarta; Kampung Melayu in East Jakarta with Ancol in North Jakarta; Ragunan in South Jakarta with Kuningan in Central Jakarta; and Kampung Rambutan in East Jakarta with Kampung Melayu in East Jakarta.

Five companies interested in Palapa Ring mega-project

Jakarta (ANTARA News) - The number of companies interested in taking part in a US$1.517-million broadband fiber optic mega-project bid has increased to 5, an official said here Tuesday.

"The five companies have already met requirements for participation in the tender on the Palapa Ring mega-project," Yusuf Iskandar, director general of post and telecommunication affairs, said on the sidelines of an Information Communication and Telecommunication Summit 2007.

The five firms that had expressed interest in the bid were PT Aqela, PT Potensi Bumi Sakti, PT Telecommunication Indonesia, Bakrie Telecom and PT Wireless Indonesia (WIN), a telecommunication subsidiary of diversified business company Sinar Mas Group.

The Palapa Ring would be a broadband fiber optic network which can carry high speed and huge capacity data. The network would consist of seven fiber optic rings connecting Sumatra, Java, Kalimantan, Nusatenggara, Sulawesi, Maluku and Papua as well as eight back hauls.

The 30,000-km-long ring would hopefully link 33 provinces and 440 cities/districts throughout the country.

"The network project is aimed at developing the telecommunication sector, encouraging economic growth and reducing the digital gap," Iskandar said, adding that the government would surely facilitate the network project.

In view of the huge amount of investment involved, the government would give the five companies a chance to set up a consortium, he said.

"The five firms have generally agreed to form a consortium and none of them has said it is ready to finance the mega-project by itself," he said.

A source at the post and telecommunication directorate general, however, said PT Aqela and PT Potensi Bumi Sakti were prepared to fund the project by themselves in cooperation with foreign investors.

Total Oil To Expand Gas Exploration In Indonesia

January 22, 2007 8:07 a.m. EST

Komfie Manalo - All Headline News Correspondent

Jakarta, Indonesia (AHN) - Total oil on Monday has announced plans to expand operations in Indonesia and invest an additional $6 billion in the next five years for oil and gas explorations in the region.

Thierry Desmarest, Total oil chairman said in Jakarta, Indonesia after meeting with Indonesia President Susilo Bambang Yuhhoyono, "We plan to continue with many projects and we will increase by six billion dollars our investment in oil and gas exploration and production, especially in Kalimantan, in the next five years."

Desmarest adds his company's initial exposure of $1 billion in the region in the past three years have already doubled.

The fresh infusion will be earmarked for the expansion of the capacity at Total's Mahakam Delta oil and gas block in East Kalimantan and to pinpoint new sources for oil and gas reserves. Over 20,000 people are currently working in Makaham Delta.

Indonesia's demand for gas is expected to grow at six percent each year between 2004 and 2012. Power supply shortages have already begun to surface outside Java. Analysts say the industry needs at least $25 billion to avert a looming power crisis by developing the domestic gas market.

Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro expressed appreciation for Total's long term commitment in developing and oil and gas industry in the region.

The Indonesian government last week announced tax incentives and to review regulations in the industry in an effort to attract more investors.

Rising oil prices have seen Indonesia focus on gas production for domestic needs rather than for export.

The gas industry in Indonesia remain underdeveloped because of poor incentives offered by the government to interested investors and make the sector economically viable. Subsidies for oil products and the absence of revenue sharing arrangements for gas field exploration/expansion in current production sharing contracts are largely responsible for the current situation, industry insiders say.

Exxon gets green light to extend Natuna oil contract

Jakarta (ANTARA News) - The government has given a green light to ExxonMobil to extend its oil exploitation contract over the Natuna D Alhpa oil Block in Natuna’s offshore, Riau Islands.

Head of Up Stream Oil and Gas Regulating Body (Bp Migas), Kardaya Warnika, said here on Monday that the government had asked ExxonMobil to officially submit a request for new contract.

"We have asked ExxonMobil to submit a better contract term and conditions than the one signed in 1990 so that it could continue its exploitation of the oil block field," Kardaya said.

He said that the government was of the opinion that the old contract did not hold advantage for the government anymore.

“Negotiations have been held but ExxonMobil has not offered a new concrete contract term and conditions,” he added.

Kardaya said the government would offer the opportunity to the other party if ExxonMobil did not make a new proposal until a specified time.

The government he said needed to develop the oil field which was previously exploited by the United States company.

Previously, Director General for Oil and Gas of the Ministry of Energy and Mineral Resources, Luluk Sumiarso said that the government had ended the ExxonMobil contract over the Natuna oil block.

After the official contract was terminated and the status of the oil block had become open again, the government would take a first step to offer the oil exploration to state-owned oil company Pertamina.

If Pertamina refused the offer, the government would open the second option for oil block through an open tender.

The last option is to offer the project directly.

Pertamina has confirmed its interest to take over the oil block exploitation, according to its President Director Ari Soemarno.

He said his company was ready to take over at least 50 percent of the shares in the exploitation of the oil field.

PLN Batam forges cooperation in building PLTU Tanjung Kasam

Jakarta (ANTARA News) - State owned electricity firm PLN Batam office had forged cooperation with PT Kideco Jaya Agung (Kideco) and PT Solusi Energi Sistem Consult (Sesco) in building a coal-fired power plant (PLTU) in Tanjung Kasam, a press release said.

"The cooperation agreement was signed on Jan 19, 2007," President Director of PLN Batam office Ifyandri said in a press release made available to ANTARA News here.

Under the deal, he said Kideco would supply low calorie coal (4.700-4,800 calories) to the PLTU and Sesco would provide technology angineering services.

President Director of Tanjung Kasam Power, which would be operating PLTU Tanjung Kasam, Binarto Bekti Mahardjana, meanwhile, said Sesco assured the project would be built in accordance with its specifications and schedule.

"The plant is badly needed to meet the power consumption in Batam as an industrial zone," he added.

PT Petra Unggul Sejahtera, a subsidiary of publicly listed PT Intraco Penta Tbk has a 90 pct stake in PT Tanjung Kasam Power and PLN Batam controls the remaining of 10 pct.

Under the 30-year transaction contract, PLN Batam would purchase the electricity from the plant for sale to its subscribers.

Hino launches Euro2 certified product line-up

Jakarta (ANTARA News) - PT Hino Motors Sales Indonesia, a subsidiary of Indomobil Group, has launched all product line-ups of Euro2 certified trucks and buses here Friday, following the recent launch of the chassis of buses running on compressed natural gas (CNG).

President Director of PT Hino Motors Sales Indonesia Toshiro Mizutani said that his company had made the products in Indonesia.

"After the drastic increase in fuel oil prices, we try to produce and provide means of transportation with low fuel oil consumption, low-cost maintenance, best performance and friendly to the environment," he said.

Hino, he said, tried to give a contribution to the relevant parties in Indonesia and hoped the contribution could be meaningful to the government in controlling air pollution.

Under its commitment to environementally friendly products, Euro2 and CNG are aimed at meeting new standards set by the government of controlling air pollution.

The company is the the country`s first producer of its Euro2 certified product line-up for commercial vehicles of category 2, category 3 and buses.

Shareholders of PT Hino Motors Sales Indonesia are publicly listed companies Indomobil Sukses International Tbk, Japanese Hino Motors Ltd and Sumitomo corp.

Switzerland, Belgium to be invited to set up chocolate plants in RI

Jakarta (ANTARA News) - Indonesia will invite Switzerland and Belgium to set up chocolate producing plants in the country which is known as one of the world`s biggest cocoa producers, a cabinet minister said.

"I will invite world-class producers from Switzerland and Belgium to invest in Indonesia. We are already to establish contacts with them. I will ask my colleagues (in the cabinet) to grant them facilities so that they can develop a chocolate industry in Indonesia," Industry Minister Fahmi Idris said here on Friday.

He said cocoa-based industries could be built at upstream as well as downstream level because the country had huge resources of the raw materials.

Like in the crude palm oil industry, the government would also issue regulations to encourage the building of downstream cocoa-based industries, he said.

He said the government hoped top chocolate producers in the world would invest in Indonesia. "We are seeking cooperation. They will maintain their brands but have to build plants here," he said.

He said the chocolate industry had not yet developed properly in Indonesia although some local brands such as "Silver Queen" had already been in circulation in the country.

"We wish to develop an industry with a complete and integrated network like the CPO industry," he said.

He said because Indonesia wished to build a chocolate industry it had refused to cooperate with a chocolate association from the European Union (Coabisco) because they only wished to buy cocoa beans from Indonesia.

"They were prepared to train farmers in the raising good cocoa plants, which they would buy later on. I did not agree with their proposal. I want them to train the local farmers and set up a factory here," he said.

Indonesia has so far been the world`s third biggest producer of cocoa beans after Ivory Coast and Ghana with its production reaching around 400,000 tons a year. Around 70 percent of the production is exported.

The minister said the government would also support the development of downstream coffee industries and local coffee trademarks because the country was also one of the world`s biggest coffee producers.

Japan Explores Building Bio-ethanol Factory

Friday, 19 January, 2007 | 15:54 WIB

TEMPO Interactive, Jakarta: The Kanematsu Corporation, a company from Japan, plans to build a bio-ethanol factory in Indonesia. It is estimated that the factory with 100,000 liters per day capacity will be an investment of around US$25 million.

Industry Minister Fahmi Idris said Kanematsu is interested in developing bio-energy based on cassava in Indonesia. “They’re interested and will explore some areas,” he said yesterday (18/1).

He said a meeting between Kanematsu and some areas considered the potential to develop the bio-ethanol base commodity has been accomplished. There are eight regions that attended the meeting. Most are from Sumatra, such as Riau and North Sumatra.

Kanematsu is a major food company from Japan , and is involved in information technology, iron and steel industry and energy. The head office is in Tokyo, Japan. In Indonesia, the company has a subsidiary PT Kanematsu Trading Indonesia. Kanematsu also has a bio-ethanol factory in Thailand with a capacity of up to 200,000 liters per day and an investment of US$50 million.

Fahmi went on to say, in addition to building a bio-ethanol factory, Kanematsu is interested to build a bio-diesel factory and electric generator with around 3 megawatt capacity with a base commodity of oil palm in Riau. “All are still in a feasibility test,” he said.

Riau Governor Rusli Zainal said Riau is one of the potential areas for building bio-diesel factories with oil palm as the base commodity. Out of 5.4 million hectares of oil palm plantations in Indonesia, around 1.5 million hectares or 30 percent are located in Riau.

According to him, from oil palm plantations in Riau, two million tons of oil palm l can be collected in a year. “It can also be the base commodity source for electricity generation,” he said.

MUHAMAD FASABENI

Pertamina sets up new subsidiary to handle all its gas operations

Jakarta (Platts)--17Jan2007

Indonesia's state-owned Pertamina has formed a new gas subsidiary called Petra Gas to handle all of its gas trading, processing, distribution and transmission operations, a senior company official said Wednesday.

"It manages all of gas business, including pipelines construction, gas processing for LNG terminals and production of LPG," said Pertamina vice president Iin Arifin Takhyan.

Pertamina's existing gas pipelines in East Java, Sumatra and Kalimantan will be part of the subsidiary, he said.

The company produced 944,000 Mcf/d of gas in 2006.

Pertamina primes its drillbit

Jakarta (IOGNews) - Indonesian state-run player Pertamina is moving to boost its output by drilling 30 exploration wells this year, up from just six sunk last year, a company official said today.

Pertamina's upstream director, Sukusen Soemarinda, said the company wants to increase its crude output to 118,000 barrels per day this year from its own operations, compared with 107,000 bpd last year.

He added that so far this year it had pumped about 32,000 bpd of oil with its partners, which is about the same as 2006.

"We will spend around 10 trillion rupiah (.1 billion) on upstream activities in 2007, including about 0 million for exploration," Soemarinda told Reuters.

He said Pertamina spent 8 trillion rupiah for upstream activities in 2006.

Soemarinda said Pertamina will drill exploration wells in North Sumatra, South Sumatra and Java.

"We hope we can find more oil in Sumatra and Java," he said.

Indonesia's crude oil production fell 0.58% to 857,000 bpd in December from 862,000 bpd in November due to ageing fields, an official at oil watchdog BPMigas said.

The country's condensate output fell to 120,900 bpd in December from 124,200 bpd in November

Indonesia, Qatar to set up joint investment fund

Jakarta (ANTARA News) - Indonesia and Qatar are planning to set up a joint investment fund for equity sharing for which Indonesia will gain 15 percent of capital, while the remaining 85 percent will go to Qatar.

"This investment fund aims to support the building of infrastructure projects in Indonesia," Finance Minister Sri Mulyani said after a limited meeting at the vice presidential office here on Thursday.

According to her, the joint investment fund of Indonesia and Qatar had been one of the results of the president`s visit to the Middle East some time ago.

The setting up of the joint investment fund is expected to net funds from the Middle Eastern countries in a bid to build infrastructure projects in Indonesia.

Under an agreement, she added, the government of Indonesia will get a 15 percent share, while Qatar the remaining 85 percent.

Asked about the total Indonesia has to pay, the minister said she could not yet mention the exact figure, but it may reach Rp15 trillion.

It is for that reason that the amount is still being calculated at her office. Earlier, the government confirmed that the infrastructure projects include the building of 1000 kms toll roads in Java, 1000 public apartment buildings and some airports, seaports and power plants.

Gading Sari Signs Deal With Pos Indonesia

By Mohd Nasir Yusoff, Bernama.com

JAKARTA, Jan 18 (Bernama) -- PT Gading Sari Indonesia, a subsidiary company of Gading Sari Aviation Services Malaysia Sdn Bhd, a logistics company, Thursday signed a partnership agreement with PT Pos Indonesia to modernise the latter's facilities and consequently start a new era in the postal services of Indonesia.

The event which also marked the official establishment of PT Gading Sari, was graced by Tengku Mahkota Pahang Tengku Abdullah Sultan Ahmad Shah at a leading hotel here.

Also present was Indonesia's Minister for State Owned Enterprises Indonesia Soegiharto and Malaysia's Finance Ministry Secretary General Datuk Dr Hilmi Yahya.

Besides looking at a potential market of 230 million people in Indonesia, the partnership is also expected to open the doors for the two parties, PT Gading Sari and PT Pos Indonesia, to jointly explore expanding into the wider Asean market.

After Indonesia, Gading Sari Aviation Services Malaysia is also looking into exploring opportunities in Vietnam and China.

Under the deal, PT Gading Sari will initially help PT Pos Indonesia set up its land, sea and air transportation faclities as well as modernise its storage, logistics and communication facilities.

Chief Executive Officer of PT Gading Sari, Taufick D. Mochtar, said that his company considered it an honour to help PT Pos Indonesia and aimed to push up PT Pos Indonesia as an international level company in the logistics industry.

Meanwhile, the chief director of PT Pos Indonesia Hana Suryana said that the partnership was its initial step towards establishing a vision and an Initial Public Offer in 2010.

For this, PT Pos Indonesia would require strategic alliances such as what it has with PT Gading Sari, he said.

At the event today, PT Gading Sari also launched its operations as the agent of Columbia Aircraft which provides executive jet charter services.

Italy's Eni, Pertamina sign cooperation agreement for oil and gas resources

The Jakarta Post

ROME (AP): Eni SpA, Italy's biggest oil and natural gas company, said Wednesday it had agreed to work with Indonesia's state-owned PT Pertamina to explore and develop oil and gas resources in Indonesia and abroad.

The companies' joint memorandum of understanding also foresees sharing technical know-how, and joint work groups have been set up to identify future projects for the two companies, Rome-based Eni said in a statement.

Eni already is operating in Indonesia , with offshore activities in the deep waters of the Tarakan and Kutei basins, and north of Sumatra. Eni also has been exploring the Tarakan basin for hydrocarbon reserves, and has operations in the Mahakam River delta.

Chevron to spend up to US$ 1 Billion in 2007

Leony Aurora, Bloomberg - 2007-01-18 12:14

Jakarta, January 17, 2007 (Bloomberg) - Chevron Corp., the second largest U.S. oil company, plans to spend as much as USS l billion on raising oil and gas in production Indonesia, said Suwito Anggoro, president of the company's unit in the Southeast Asian nation.

Most of the funds will be spent on a project to recover oil by injecting steam into the northern part of its Duri field in Sumatra island, Anggoro said in Jakarta.

The company will spend between $800 million and $1 billion, an increase on last year's spending of $750 million, in Indonesia, he said.

Chevron, which accounts for 45 percent of the country's production, is under pressure from the government to halt the steady decline of output at the aging fields in Sumatra.

Indonesia produced a near-record low of 857,038 barrels of oil a day in December, according to data from oil regulator BPMigas.

Chevron will pump an additional 6,000 barrels a day from the North Duri project next year.* Anggoro said on Oct. 6.

That will help to compensate for declining production from the existing 200,000barrel-a-day Duri field.

Chevron produces 440,000 barrels a day of crude and condensate, a light type of oil associated with gas, from its fields in Sumatra, Anggoro said on Oct. 6.

The company also supplies gas to the world's largest natural gas plant in Bontang, East Kalimantan.

Indonesia to build 10 coal-fired power plants

Source: Xinhua

Indonesia's state-run electricity company PT Perusahaan Listrik Negara (PLN) Tuesday reached agreement with 10 private firms on the joint construction of 10 coal-fired power plants worth 985 million U.S. dollars.

The combined capacity of the ten power plants is expected to reach 423 megawatts, Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters here.

The power plants will be built on Kalimantan, Sulawesi, Papua and Sumatra islands, all will use Chinese-made generators, said the minister.

Indonesia triple play bid to lift reserves

Jakarta (IOGNews) : Indonesia signed three new production sharing contracts today with ConocoPhillips and its partner Statoil, CNOOC Ltd and Premier Oil in an effort to boost reserves.

Asia-Pacific's only Opec member has been offering new exploration rights to try to stem a steady decline in oil production that has threatened its status as an exporter.

Indonesia has struggled to maintain output as the country has failed to tap new oilfields fast enough.

ConocoPhillips is in a joint venture with Statoil of Norway to explore 5086 square kilometres of the Kuma block off west Sulawesi.

The oil companies will get 35% of any oil found in the Kuma block and 40% of gas, while the rest will go to the government.

Indonesia also signed an oil contract with CNOOC for the onshore Batanghari block in central Sumatra. The Chinese company will get 20% of any oil found and 40% of gas in Batanghari.

"We will know whether there is oil and gas in those areas after they carry out exploration. However, our expectation is that they will find oil or gas," said Indonesia's Oil Minister Purnomo Yusgiantoro.

Indonesia also signed a contract with Premier Oil for the onshore and offshore Buton block in south-east Sulawesi. The UK-based company will get 25% of any oil found and 40% of gas.

Indonesia said it has about 8.6 billion barrels of proven and potential oil reserves and 182 trillion cubic feet of gas, Reuters reported.

Amec Berca Indonesia (ABI) has won a million engineering contract for Total's Tunu phase 2 development off Indonesia.

Jakarta (IOGNews) : ABI will be responsible for detailed engineering work, including pre-engineering, survey, detailed engineering and final documentation for a new utility platform for the Tunu shallow-water gas field in the Mahakam Delta, East Kalimantan.

The work is scheduled to be completed in September, with the platform due to begin operation in mid-2008.

Six Foreign Investors Competing for KPC and Arutmin

Wednesday, 17 January, 2007 | 13:54 WIB

TEMPO Interactive, Jakarta: Six international investors are competing to buy shares in PT Kaltim Prima Coal (KPC) and PT Arutmin belonging to PT Bumi Resources Tbk.

The divestment process is expected to be completed this month.

Eddie J. Soebari, Director of Finance at Bumi Resources, said six potential investors are undergoing fit and proper testing as well as visiting the mining locations of KPC and Arutmin.

“In addition, they are also accessing the data room,” he told Tempo yesterday (01/16) in Jakarta.

Previously, Bumi had almost offered 96 percent of KPC shares and 100 percent of Arutmin shares to PT Borneo Lumbung Energi—an affiliate of PT Renaissance Capital—in the middle of last year.

However, the US$3.2 billion transaction failed at the final moment.

More recently, Bumi has begun the divestment process of 30 percent of the shares of each of its two subsidiaries.

According to Eddie, initially, 13 companies were interested to KPC and Arutmin.

After the first selection phase was held last month, six investors passed through to the due diligence phase.

Eddie stated only that they came from abroad and not prepared to reveal their identities.

“I could only say that they are from Asia and Europe,” he said.

Eddie was also not prepared to confirm whether or not previously interested companies were on the list.

As previously reported, foreign investors interested in purchasing the shares of these two giant coal mining companies included CVRD (Brazil), BHP Billiton (Australia), Glencore International AG (Ireland) and Marubeni (Japan).

Eddie only mentioned that the six companies had mining backgrounds: they have mining operations or trade companies that deal with mining products.

The reason for Bumi's divestment of the KPC and Arutmin shares was to increase the company's value.

YURA SYAHRUL | MUCHTAR WIJAYA (PDAT)

ConocoPhillips and StatOil to Work on Oil and Gas Project

Wednesday, 17 January, 2007 | 16:38 WIB

TEMPO Interactive, Jakarta: ConocoPhillips and StatOil have signed a partnership contract for the Kuma Block, East Makassar.

The US and Norwegian companies are cooperating in the oil and gas sector in Indonesia.

Bill Berry, Executive President of Exploration and Production of ConocoPhillips, said yesterday (01/16) in a press conference that the signing was a big strategic step so as to develop their business in Indonesia.

ConocoPhillips and StatOil already presented their Kuma Block offer through a direct offer process on 12 October 2006.

The settlement as the block winner was announced on 13 December 2006.

Bill Maloney, Senior Vice President of Global Exploration E&P StatOil, said that for StatOil, it will be a crucial start to enter upstream business in Indonesia.

“In the project, we will use our experience of deep sea operation and improve our capability of applying the advantage of technology on upstream business,” he said.

NIEKE INDRIETTA

JobsDB moves to expand consumer base

The Jakarta Post, Jakarta

PT JobsDB Indonesia, one of the largest online job placement companies in the country, has invested a total of US$300,000 in hardware infrastructure this year to improve services for its customers.

The company has acquired an additional 21 blade server computers, JobsDB Indonesia managing director Eddy Tjahja said in a statement, to add to its existing service capacity, and support its plans to add new online features for its customers.

"The online job market in Indonesia is maturing, with more people being aware of using such services," Eddy said.

"We are responding to this trend through this investment of ours for this year."

The latest investment follows the company's move in May 2005 to move its main computer servers from Hong Kong to Jakarta, so as to provide a faster online service for its customers.

The company expects growth of between 30 to 40 percent in its customer base this year as a result of the new investment, Eddy said.

JobsDB Indonesia at present serves up to 10 million employers, job seekers and advertisers in the country.

Its parent company, based in Hong Kong, has networks throughout China, India, Southeast Asia, and Australia, with 5.6 million member job seekers and over 110,000 corporate employers.

Apexindo secures US$3 million drilling contract

Jakarta (ANTARA News) - Indonesian drilling company PT Apexindo Pratama Duta has secured a US$3.476 million contract from the Pertamina-Medco E&P joint operating body for onshore drilling on Sulawesi island.

Under the contract signed on Jan 15, the company will conduct onshore drilling on rig # 2 in the Senaro-Toli Block in Sulawesi, Apexindo corporate secretary Ade R. Saptari said in a statement to the Jakarta Stock Exchange on Wednesday.

The drilling was expected to be completed on April 21, he said.

Chinese firm invests $10 million in S. Sulawesi's metal sector

Makassar, South Sulawesi (ANTARA News) - China`s Tianjin Material & Equipment Group Corporation will invest Rp90 billion (US$ 10 million) in the metal mining sector in Tanatoraja and Luwu districts, South Sulawesi, its official said.

The Chinese industrial business group will exploit ore, copper and tin deposits in two districts early this year in cooperation with local firm PT Sangkaropi, the Chinese company`s general manager for imports and exports Wang Gang said here Tuesday.

South Sulawesi Governor Amin Syam, responding to the Chinese company`s investment plan pledged that his administration would speed up the process of issuing an environmental impact analysis permit and an investment recommendation to the company in a bid to create job opportunities for local people.

Wang, in return, expressed hope that the local administration would provide the China`s third largest industrial company with reliable infrastructure.

The governor asked the Chinese investor to eye potential natural resources not only in Tanatoraja and Luwu districts but also in Enrekang district which has abundant ore, copper and tin deposits.

More oil, gas blocks to be offered in 2007

Ika Krismantari, The Jakarta Post, Jakarta

To bolster oil and gas prospecting in the under-explored eastern part of Indonesia, the government will offer 30 new oil and gas blocks later this year, mostly located in the deep waters of Papua and Nusa Tenggara.

R. Priyono, the energy ministry's director for the upstream oil and gas industry, said Monday that the government would also offer a package of incentives, including a flexible commitment for investors.

"If after only two or three years of exploration they consider the area unpromising, they could return the rights to the government," Priyono said.

Currently, companies are usually granted six-year exploration rights.

The 30 blocks, he said, would be offered through a regular tender and direct offer mechanism, scheduled to start in May or June.

Priyono added that in February the government would announce the results of 20 tenders held in August last year.

The areas put on the table last year included new blocks in Madang, South Mandar, Sageri and South Sageri, which are all off the South Sulawesi coast, as well as the Enrekang block in onshore South Sulawesi and three new offshore blocks in West Sulawesi: Karama, Malunda and Mandar.

Several major energy companies, including state oil and gas firm Pertamina, U.S.-based Chevron, and France-based Total participated in the process.

In a bid to boost the country's declining oil production, Indonesia has been soliciting private investors for oil and gas exploration activities since 2001, mostly via tender.

There have been a total of 86 new production-sharing contracts since 2001. The latest were signed last December, when the government awarded exploration rights over new oil blocks to 18 companies through a direct offer mechanism.

Among the winners at that time were a consortium of the third-biggest U.S. oil firm, ConocoPhillips, with Norway's Statoil ASA, which won the Kuma block in western Sulawesi. China's largest offshore oil producer, CNOOC, claimed the Batanghari block in central Sumatra.

Indonesia, once a major oil producer in the Organization of Petroleum Exporting Countries (OPEC), has suffered a major decline in its oil output over the past several years because of aging fields and a lack of new exploration. The country is now a net oil importer.

The government is targeting production of 1.3 million barrels of oil per day (bopd) by 2009, compared to the current 1.06 million bopd.