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The Upstream Oil and Gas Executive Agency, or BPMigas, is
considering shortening the mandatory exploration period in the oil and
gas sector to three years from 10 years to speed up exploration at
newly awarded oil and gas blocks.
BPMigas chairman Kardaya Warnika said here Tuesday if oil and gas
companies failed to find oil or gas reserves during the three-year
period, they would have to return the concession areas to the
government.
Should the companies succeed in finding oil or gas reserves during the
period, they would be not be given deadlines for conducting drilling
activities, he said.
Under the current regulation, oil and gas contractors are given 10
years to carry out exploration and drilling activities, or the
government will revoke their rights.
"We plan to exclude drilling activities from the list of commitments
stated in the exploration stage. We are aware that drilling can be done
only if the feasibility study proves that reserves are available. If
there are not any, we don't have to do the drilling," Kardaya said.
He hoped that under the new arrangement, the government would be able
to meet its target of a 30 percent increase in oil and gas production
by 2009.
The country's oil production has been suffering a downward trend, with
oil production declining from 1.3 million barrels per day in 2001 to
about 950,000 barrels per day this year, according to data from the
Energy and Mineral Resources Ministry.
Indonesian gas production has also declined, from 8.6 billion cubic
feet per day in 2003 to 8.1 billion cubic feet per day in 2006 and an
estimated 8 billion cubic feet per day this year.
This decline in production is mainly the result of falling production
at aging oil and gas fields.
In another effort to boost the country's oil production, the government
said earlier it planned to offer companies developing new oil and gas
concessions in deep sea and frontier areas more favorable production
splits.
Director general of oil and gas Luluk Sumiarso said recently that under
the planned production sharing scheme, oil and gas companies operating
in deep sea and remote areas would receive 49 percent of the net
production, while the government would take 51 percent.
This offer is far better than the government's current arrangement,
under which investors receive 15 percent and 30 percent, respectively,
from oil and gas production.
With those plans on the table, Kardaya was optimistic oil production
would increase to around 100,000 barrels per day next year, meeting the
production target of 1.03 million barrels of oil set by the government
in the 2008 state budget.
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