Association: Indonesia's Changes To Oil, Gas Deals 'Positive' For Investors



Reuters

JAKARTA, Sept 5 (Reuters) - Indonesia's revisions to new oil and gas production-sharing contracts are positive for investors, the leading energy industry association said, amid waning interest in energy exploration and declining oil output from the former OPEC member.

The archipelago overhauled its oil and gas production-sharing contract scheme earlier this year to reduce the burden of energy exploration on government finances, but analysts said the changes were still not enough to make Indonesia attractive for energy investors.

Under a new revision of the rules that was released on the energy ministry's website on Sunday, the government still takes a base split of 52 percent for gas and 57 percent for oil, but has increased other components of the split.

The revisions increase contractors' share of output in the second and third stages of production, and where oil and gas has a higher sulphur content, or at the minister's discretion, among other changes. [http://bit.ly/2iYJGCn]

The changes were "positive", Marjolijn Wajong, executive director of the Indonesian Petroleum Association (IPA), told Reuters in a text message, and could help improve "the economics of fields, particularly during the initial stages of production".

The government announced in July it was also drafting tax incentives to try to make the new energy contracts more attractive.

Indonesia's crude oil output peaked at around 1.7 million barrels per day in the mid-1990s. But with few significant oil discoveries in Western Indonesia in the past 10 years, production has fallen to roughly half that as old fields have matured and died.

The energy industry is a vital part of the Indonesian economy, but its contribution to state revenue has dropped from around 25 percent in 2006 to an expected 3.4 percent this year, according to data compiled by consulting firm PricewaterhouseCoopers.

(Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing by Jacqueline Wong)



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