Tuesday, May 10, 2011
Knight Ridder/Tribune Business News
by Rangga D. Fadillah, The Jakarta Post, Indonesia
The US Department of Energy called on the Indonesian government to ensure the certainty of energy sector contracts and regulations to attract more investment from US companies.
Tom Cutler, the department's director for European and Asia Pacific affairs, said that following Indonesia's impressive economic growth over the past several years, the country needed more investment to develop its energy potential to cope with fast-growing domestic demand.
"The most important [thing to attract investment] is certainty. Once you have a contract with certain terms, companies want those terms to stay in place, because they make business calculations based on whatever the contract terms are," he told reporters on the sidelines of the US-Indonesia Energy Investment Roundtable in Jakarta.
Investment from US companies would help Indonesia boost its energy supply since they have been proven of being capable to provide capital and technology not only in the oil and gas sector but also in renewable energy, Cutler said.
US companies were interested in developing all of Indonesia's energy resources, including geothermal, bio-energy, hydro and wind, he added.
"We heard that Indonesia has 40 percent of the world's geothermal resources. We've some of the best companies in the world, like Chevron, which are interested in developing geothermal resources," he said.
Recently appointed US Ambassador to Indonesia Scott Marciel said US companies were interested in undiscovered oil and gas reserves offshore or in deep waters.
"According to our data, 90 percent of Indonesia's undiscovered oil and gas reserves are located in offshore and deep water areas," he said during his opening remarks.
Cutler said that to reverse the declining trend in oil production, Indonesia was in dire need of more investment to find more oil and gas reserves.
The nation's oil production is currently 916,000 barrels of oil per day (bpd), far below a government target of 970,000 bpd for 2011. Indonesia produced 954,000 bpd in 2010, below a target of 965,000 bpd.
Energy and Mineral Resources Minister Darwin Zahedy Saleh, who also attended the roundtable, said he would consider providing fiscal "incentives and more attractive production-sharing arrangements" to potential investors in the energy sector.
However, he did not elaborate in detail on the form of the incentives and more attractive production sharing arrangements.
"The government is also ready to consider fiscal incentives to encourage acceleration of resources development, as well as more attractive terms and conditions in production-sharing contracts," he said in his speech.
Darwin said he hoped that the bilateral roundtable would be soon followed by the participation of more US investors, not only in oil and gas, but also infrastructure development, new and renewable energy development and energy conservation.
Copyright (c) 2011, The Jakarta Post, Indonesia / Asia News Network. Distributed by McClatchy-Tribune Information Services.
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