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Italy-based oil company Eni SpA and Australian oil giant
Santos are asking for more favorable splits and incentives to encourage
the search for oil and gas in their respective blocks, an official says.
Achmad Luthfi, Upstream Oil and Gas Regulatory Agency (BP Migas)
director for planning, said Eni had requested a better split in
connection with its operations in the Krueng Mane block in Nanggroe
Aceh Darussalam (NAD), as the development of the block had been costly.
For the same reason, he said, Santos was not only seeking a better
split, but also incentives for its operations in the Jeruk block in
East Java.
"They have informally requested these, but we haven't received the
official request as yet," Luthfi said.
It is believed that the two operators want a production split of 51:49
in favor of the government, from the current 85:51 for oil production
and 70:30 for gas production.
Luthfi said that their requests were based on a split that had been
applied in Blok A in Aceh, where the operators had also encountered
difficulties in developing the block.
The two companies could not be contacted for comment.
Eni risks losing the right to develop the Krueng Mane block if it fails
to file an exploration plan with the government by 2009.
BP Migas chairman Kardaya Warnika said previously that Eni had to
present its Plan of Development (POD) for the exploration of the block
before 2009, when its 10-year timeframe allowed for its submission
expires.
According to the relevant regulations, a block operator is given a
period of 10 years from the date of granting of the exploration rights
to submit its POD to BPMigas, which has the right to rescind the
contract if the operator fails to do so.
BP Migas could then offer the block to another company.
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