Indonesia has failed to attract investors for the oil and gas blocks tender which was offered earlier this year due to a shipping regulation — the so-called as cabotage issue — and the non-availability of data on the blocks, a senior government official said Monday.
“The cabotage issue is one of some factors which caused investors not to participate in our oil and gas blocks tender. The other reason is the non-availability of enough data on the blocks. The government could not provide detailed data due to a limited budget,” oil and gas director general at the energy and mines ministry Evita Legowo said.
“We will do our best to attract investors in the next oil and gas blocks tender,” she said.
Indonesia had offered 14 blocks in middle of this year, but only three blocks attracted investors, Legowo said.
The government awarded the South Sokang block offshore Natuna to a consortium of Lundin and Salamander Energy; the Wokam II block offshore Papua to the Murphy Overseas Venture and the Sokang block offshore Natuna to local company Ephindo, Legowo said.
“These companies have committed to spend $27.7 million for exploration activities in the first three years. The government also received another $3.5 million in signature bonuses,” Legowo added.
Indonesia will apply the controversial cabotage policy under which all vessels operating in its waters have to be registered in the country and use the Indonesian flag from May 2011.
Under the rule, which was notified in 2008, foreign-flagged vessels would not be allowed to operate in Indonesian waters. Most oil and gas companies operating in the country use foreign vessels for exploration, production and storage. The vessels include jack-up drill ships, submersible drill ships, floating storage, floating production, storage and offloading vessels, LPG vessels, LNG vessels and seismic survey vessels.
The ship policy would result in a drop of 275,000 b/d, or nearly 30%, in the country’s daily oil and condensate output by next year, the chairman of upstream regulator BPMigas R. Priyono said last week.
The energy and mines ministry is seeking is an exemption for vessels used in oil and gas activities that would allow foreign-flagged vessels to be used when no Indonesian-flagged vessels exist for a particular purpose or when none were available, Legowo said last week.
Indonesia’s crude and condensate output has been steadily declining for at least the last decade because of natural decline at aging fields. The energy and mines ministry has been trying to reverse that decline. It set a target to produce 965,000 b/d of crude and condensate for this year, but with current production running at about 950,000 b/d, is pessimistic about achieving the target.
The country also failed to meet its 2009 crude and condensate production target of 960,000 b/d, pumping only 949,138 b/d.
Targets have been set for 970,000 b/d in 2011 and 1 million b/d by 2013, but many see those as unachievable if the new shipping regulation goes into effect.