Oil and gas investors relinquish 15 exploration blocks to the Indonesia government in 2015, nearly double those they returned the previous year, according to the country's energy regulator.
JAKARTA, Feb 22 (Reuters) – Oil and gas investors relinquished 15 exploration blocks to the Indonesian government in 2015, nearly double those they returned the previous year, according to the country's energy regulator, amid low oil prices and slowing global demand growth.
Indonesia's energy sector has seen a string of production curbs and asset cuts in recent months, with companies reeling from crude prices that have improved little since hitting a 12-year low in January.
Energy production is an important source of Indonesia's state revenues, and many of the big fields that have propped up its budget in recent decades are declining, with low oil prices limiting the prospect of increased recovery or finding new sources.
Oil and gas companies lost $820 million on exploration and other costs for the 15 blocks handed back to the government last year, Amien Sunaryadi, chairman of the upstream oil and gas regulator (SKKMigas), told a parliament hearing on Monday.
Companies usually hand back exploration assets when either they have made no discoveries or the prospect of extracting reserves from them is seen as uneconomical. Under Indonesian law companies can only begin to recover costs once oil and gas blocks start producing.
No company names were given in the presentation to parliament on Monday.
The amount lost in 2015 is almost three times as much as the $283 million spent on eight blocks relinquished by contractors in 2014, Sunaryadi said, and nearly double the $456 million spent on the five blocks that were relinquished in 2013.
Indonesia's top crude producer, Chevron Corp, announced last month it would not extend its contract to operate the East Kalimantan oil and gas block, after revealing plans in December to sell its stake in the South Natuna Sea Block B.
Output from Southeast Asia's biggest crude producer has been declining steadily from just above 1.6 million barrels per day (bpd) in the mid-1990s, and could slip to 753,400 bpd this year from 779,000 bpd in 2015 if oil prices hit $20 per barrel, the regulator said earlier this month.
Oil prices jumped higher on Monday following steep losses in the previous session, supported by a fall in the U.S. rig count, but analysts said oversupply was still capping the market.
(Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing by Tom Hogue)
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