Malaysian investor wins Palmerah oil concession in South Sumatra

Nov 25, 2003 01:00 AM

Malaysian oil contractor Tately & NV won the tender for the onshore Palmerah oil and gas concession in South Sumatra, outbidding its strongest rival, Indonesia's state-owned oil and gas company PT Pertamina.
"The main basis for picking this company (Tately) as the winning bidder is its investment commitment in the first year of exploration," said Indrayana Chaidir, director for exploration and production at the Directorate General of Oil and Gas.

The Palmerah block is one of seven new oil and gas blocks awarded to investors by the government. The government initially offered eight blocks, but one block, the Anambas block in West Natuna, was not awarded as the only interested bidder, Genting Oil and Gas from Malaysia, did not submit its bid by the deadline.
The Palmerah block attracted the strongest interest among investors because it is seen as the most lucrative for exploration, particularly as the neighbouring blocks have already proven to have huge oil reserves. United States-based ConocoPhillips is reported to have also bid for the block.

Pertamina has been lobbying the government to be given special treatment to allow the state firm to acquire the block. But government officials have told Pertamina that since the enactment of the new oil and gas law, the company would no longer get preferential treatment from the government.
Pertamina, which was converted into a limited liability company in September, has long been pampered by the government with oil and gas acreages and other facilities. Meanwhile, Indrayana said that the government had obtained an investment commitment of some $ 173.55 mm during the exploration period from the investors that won the seven new oil and gas blocks. The investors are mostly local companies.

With the newly awarded contracts, the government has parcelled out a total of 17 oil and gas acreages this year compared to last year when only one oil and gas concession was awarded. Earlier this year, the government awarded 9 oil and gas concessions worth$ 170 mm.
This will help lift the country's oil and gas output, which has been in the doldrums for some time due to declining investment. Indonesia, the only member of OPEC in the Southeast Asian region, currently produces 1.1 mm bpd of oil, lower than its quota of 1.317 mm bpd set by the organization. The government expects that the country's oil output will increase by between 100,000 bpd and 150,000 bpd next year as 14 new oil and gas blocks are expected to start production.

Seven new oil, gas contracts
Blocks -- Contractors
1. Asmat Block (Papua) -- PT Indonesia Papua Petroleum
2. Bontang Block (E. Kalimantan) -- PT Exindo Petroleum Tabuhan
3. Billiton Block (Java Sea) -- PT Mitra Archipelago Investment
4. Halmahera Block -- PT Trivicindo International
5. West Salawati Block (West Papua) -- Pacific East Asia Resources (Singapore)
6. Bangkanai Block (E. Kalimantan) -- PT Elnusa
7. Palmerah Block (S. Sumatra) -- Tately & NV

Source: The Jakarta Post
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