Indonesia Invites Bids for 3 Non-Conventional Blocks in Java, Kalimantan

Indonesia's Ministry of Energy and Mineral Resources (MEMR) invited interested companies to submit bids to explore three non-conventional oil and gas blocks in the country, according to a statement issued by the MEMR Monday.

The three non-conventional oil and gas blocks offered by the Indonesian authorities are Blora in East Java and West Java; Batu Ampar in East Kalimantan; and Central Bangkanai in Central Kalimantan and East Kalimantan.

Companies keen on these three blocks have to submit their bids electronically by Dec. 15.

The launch of the three blocks is the first since the issuance of the new MEMR regulation on the development of non-conventional oil and gas blocks, with the latest move an attempt by the government to encourage investment in this sector, covering shale and coal-bed methane, which has been hurt by unfavorable regulations.

The new regulation will allow contractors to select from any of the three contract options, MEMR Director of Oil and Gas Djoko Siswanto said, as quoted by local media The Jakarta Post Tuesday.

These include production sharing contracts (PSC) -- similar to those currently being implemented at all oil and gas blocks and use a net PSC sliding scale and gross split sliding scale. The second option covers a gross split sliding scale incorporating a no cost-recovery mechanism and lastly the split in production between the government and contractors will be raised progressively depending on the volume of production, The Jakarta Post added.

Separately, MEMR reported Monday that Indonesia's upstream regulator SKK Migas and PT Pertamina Hulu Energi (PHE) Kampar signed a PSC for the Kampar Block, spread over 181 square miles (469.22 square kilometers) and previously operated by PT Medco E&P Indonesia from 1995 to 2013, in Riau Province. Medco continued to operate the block from 2013 to 2015 at the government's request.  

Under the PSC, PHE Kampar's work commitment for the first three years includes geological study, drilling of five infill wells as well as one exploration well, costing $13.5 million. The company will also pay a $5 million signature bonus.

According to MEMR, recent production at the Kampar Block stood at around 1,380 barrels of oil per day.

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