Indonesia Can Add Commitment to Oil and Gas Investment US $ 64 M

Indonesia obtained an additional investment commitment in the upstream oil and gas sector of US $ 64 million after the announcement of the winner of the second phase of the oil and gas block 2018. Two oil and gas companies were declared winners in this auction, namely Hong Kong Jindi Group Co Ltd for South Jambi B Block and PT Minarak Brantas Gas for the Banyumas Block.

 the Banyumas Block

Deputy Minister of Energy and Mineral Resources (ESDM) Arcandra Tahar said Hong Kong Jindi Group Co Ltd promised a definite work commitment of US $ 60 million in the South Jambi Block. While Minarak Brantas is committed to disburse an investment of US $ 4 million in the Banyumas Block. In addition, Hong Kong Jindi and Minarak Brantas also paid signature bonuses of US $ 5 million and the US $ 500 thousand respectively.

"The government's total signature bonus is the US $ 5.5 million, and a definite commitment of US $ 64 million which includes G & G activities, 2D 300-kilometer seismic surveys, 5100 square kilometers of seismic, and drilling of 4 wells," said Arcandra.

Arcandra explained, the government offered six oil and gas blocks in the second phase of the oil and gas block auction. Three of them are production blocks, namely Makassar Strait, Selat Panjang, and South Jambi B. Then the other three are exploration blocks, namely South-east Mahakam, Banyumas, and Andika Bumi Kita.

Even though there are only two winners in this auction, this does not mean that the auction this time is lonely. He said, until the deadline for submission of participation documents on October 12, there were 18 documents accessed by oil and gas companies. However, the result is four oil and gas blocks that are in demand by five auction participants. The four oil and gas blocks that are in demand are Makassar Strait, Selat Panjang, South Jambi B, and Banyumas.

Makassar Strait Block

Furthermore, the five bidders' documents were evaluated. This evaluation criterion is that the company has the financial and technical capabilities to finance and carry out petroleum operations, has a good track record in petroleum activities, and fulfills the terms and conditions of the main auction for the work area.

Of the five participants, only two participants qualified. The other three participants mentioned he did not meet the criteria set out in the terms and conditions (T & C). But he was reluctant to reveal what the unmet requirements were. Arcandra ensures that the unmet requirements are not from the commercial side.

"This is between the government and the company (who knows these requirements)," he said.

Meanwhile. ESDM Ministry's Director General of Oil and Gas Djoko Siswanto explained, there are obligations in these terms and conditions that must be met for auction winners. However, the prospective winner actually questioned one of these obligations.

"We already wrote the T & C, he didn't want to, he negotiated. This is not possible, "he said.

For auction winners, the signature of a production sharing contract (PSC) is targeted no later than the end of November

"With these two working areas (WA), there are a total of six WA that sell gross gross contracts," Arcandra said.

Third phase

Arcandra further revealed the oil and gas working area that is not in demand is likely to be included in the third phase of the oil and gas auction 2018. In addition, in this next auction, the government will also offer oil and gas blocks that have been or are conducting joint studies. He hopes, next week, the third phase of the auction will be opened.

"Closed before the end of the year. So the determination of the winner can be immediate, "he said.

Companies that carry out a joint study of oil and gas blocks, some of which are multinational oil and gas companies. However, Arcandra admitted that he had not confirmed how many oil and gas blocks were auctioned in this third stage. It is now still evaluating oil and gas blocks most likely attracted by investors.

"It must be calculated. Do not auction it off because the data is lacking," he said.

Meanwhile, Djoko said, there are at least eight oil and gas blocks that will be auctioned in the third phase of the auction. Unfortunately, he did not specify what oil and gas blocks would be offered.

"What is clear is all direct bidding auctions," he said.

In addition to being auctioned, the block that is not in demand in the second phase of the auction, namely southeast Mahakam and Andika Bumi Kita, he said will be offered a joint study by PT Pertamina (Persero).

"Pertamina is interested in blocks that have not been sold, but with a joint study," he said.

It has communicated with Pertamina about the joint study plan in the two blocks. Later, Pertamina will look at data from the two blocks. It hopes that Pertamina will conduct a joint study in these two blocks, one of which is because the South East Mahakam Block is located close to the Mahakam Block.

"Pertamina has the Mahakam Block, if it is close to the block, who knows if it connects with Pertamina's reservoir. The production phase is already in the Mahakam Block. So Pertamina wants to the joint study, "explained Djoko.

Investor Daily, Page-9, Tuesday, Oct 23, 2018