Govt moves carefully in offering oil and gas blocks

After failing to find investors for most of the oil and gas blocks offered last year, the government is now making more careful preparations to auction up to 35 new fields later this year.

The Energy and Mineral Resources Ministry has announced the names of the 35 blocks on its official website, but Edy Hermantoro, an upstream oil and gas director at the ministry said the actual number of blocks to be auctioned could be less.

“This is what we call early market research. We announce the blocks so that we can get responses from the oil and gas contractors. The blocks reaching the actual tender process could be only 15 or 20 blocks, depending on the responses of contractors,” Edy said on Monday.

He added that expected contractors’ responses included reactions to the completeness of data on blocks. “They may give us inputs if they think the data is incomplete,” said Edy, adding that the government was focusing on finding serious investors.

On its website on Monday, the ministry announced the maximum 35 blocks planned to be auctioned this year. Of the 35 blocks, 19 are to be offered under regular tender procedures and the remaining 16 blocks are planned to be offered under joint study mechanisms.

Under the latter tender method, interested investors may propose to the government to undertake a joint study to assess oil and gas reserves in one or more blocks.

Once the studies find positive indications of reserves, then the government opens a bidding
process where the first bidding rights will go to the company that proposed, financed and undertook the studies.

The 19 blocks planned to be offered under the regular tender are: East Natuna, SE Baronang, Nias I, Nias II, Tanjung Jabung, Sunda Strait I, Sunda Strait II, Sunda Strait III, West Kangean I, West Kangean II, South Kangean I, South Kangean II, SE Mandar, SW Makassar, West Sebuku, Saliki, East Tarakan, SW Bird Head and Wokam.

The oil and gas blocks planned to be offered under the joint study arrangements include: North Sokang, NW Natuna, Gurita, Sumbagsel (southern Sumatra).