The government took over the exhausted oil and gas fields contract

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The government took over the exhausted oil and gas fields contract

Monday, 08 March 2010 09:25

JAKARTA: The Indonesian government will take over the management of the oil field and gas (oil) that the contract has ended, in order to strengthen the government's bargaining position against the contractor cooperation contracts (KKKS) oil and gas.
Minister of Energy and Mineral Resources (ESDM) Darwin Zahedy Saleh revealed oil and gas contracts that are due will be evaluated again before it was decided to proceed or otherwise.
"The most important for the Government of Indonesia is how to position this nation could be better than ever before. In principle, oil and gas fields with the work that is due back into the property, through government ownership," he told Bisnis yesterday.

To KKKS who had contributed to the achievement of significant oil and gas production target, he added, if continued cooperation contract with the Government of Indonesia, of course, would be defined as a new contract with the draft terms and condition is different from before.

However, he explained, the government still appreciate the positive contributions that have been donated by foreign partners to increase national oil and gas sector.

Contract extension

According to him, about KKKS extension of contract oil and gas will still have to consider how much domestic demand will be adjusted to the decline in national oil production naturally by 12% per year because the conditions the old wells.

"Of course, necessary steps of strategic actions, particularly related to investment to maintain production levels and more. Investors likely will not invest if they have no certainty whether the contract will be extended or not. This is not a simple issue and needs a good solution. '

On the one hand, he continued, the government should maintain oil production levels, both nationally and at the operator level, but on the other hand, the government should also consider these KKKS contract period was almost over and need an extension.

As an illustration, if the achievement of national oil production in January-February 2010 under the budget target of 965,000 barrels per day (bpd), he explained, the average production to be achieved until the end of this year approximately 967,000 bpd.

According to him, the central government will communicate with local governments in order to realize the oil and gas infrastructure development plans are in the fields that require local government permits.