Indonesian Govt to Hunt for More Oil in The East

- Indonesian Govt to Hunt for More Oil in The East

Friday, May 20, 2011
Knight Ridder/Tribune Business News
by Rangga D. Fadillah, The Jakarta Post, Indonesia

Unexplored oil and gas reserves in eastern Indonesia will play a vital role in securing the country's energy needs in the future, therefore more investment is necessary to develop the area, a minister said.

"As many oil and gas fields are maturing -- continuing their natural decline -- we're optimistic that frontier and deep water areas, which are mostly located in the eastern part of Indonesia, will contribute significantly to future production," Energy and Mineral Resources Minister Darwin Zahedy Saleh said in a speech at the opening ceremony of "The 35th Indonesian Petroleum Association (IPA) Annual Convention and Exhibition" at the Jakarta Convention Center.

The government has launched several initiatives to encourage investment in the area, such as increasing the number of offered working acreages for oil, gas, coal bed methane (CBM) and geothermal sources, he said.

"We are upbeat seeing the positive responses to new blocks offered in deep water and frontier areas such as Semai, Halmahera, West Aru, Southwest Timor and South Java," Darwin said.

Vice President Boediono, who officially opened the event, reaffirmed the government's commitment to promoting natural gas as the main energy source to fuel Indonesia's robust economic growth following the country's failure to boost oil production.

"Last year, I mentioned that gas was our future. That remains our basic policy. The government obviously has a strong interest in keeping them on track and will continue to closely monitor their progress," Boediono said.

He said the government would continue to facilitate "gradual moves toward economic pricing for domestic gas use" and direct negotiations between gas producers and consumers to tackle pricing problems.

"However, we know that the key issue is greater than this. The critical step is how to accelerate the development of gas infrastructure," Boediono said.

He promised that the government would speed up the completion of gas pipelines in Java and the construction of floating storage and re-gasification units in Sumatra and Java.

"One unit in the Jakarta area is expected to be ready as early as 2012," he said.

Commenting on declining oil production in the country, Boediono expressed his disappointment, saying that it was bad for the country's energy security and state revenues.

He personally requested upstream oil and gas regulator BPMigas and the Energy and Mineral Resources Ministry to work harder to solve the problems of unplanned shutdowns and to encourage oil companies to conduct enhanced oil recovery measures to increase production.

"I will be asking BPMigas and the Energy and Mineral Resources Ministry to pay more serious attention to these issues," he said.

IPA president Ron Aston, who is also the general manager of Australia-based oil and gas firm Talisman, supported the government's vision to prioritize natural gas as the main energy source in the future.

But, he said boosting gas production might be very challenging, particularly when sources were found in remote areas like the eastern part of the country.

"Industries fully support this idea, but it can only be achieved with the installation of much needed domestic infrastructure like transmission pipelines, liquefaction plants and receiving terminals," he said.

Aston also urged oil and gas companies operating in Indonesia to explore the country's extensive unconventional gas resources like CBM and shale gas.

"Around the world we see the growing importance of CBM and shale gas and they can play a vital role for Indonesia. But, the effort needs to be supported by appropriate regulations, incentives and partnerships to ensure that the necessary investment is forthcoming," he said.

Copyright (c) 2011, The Jakarta Post, Indonesia / Asia News Network

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