Indonesia Urges Development of Marginal Fields

Indonesia's Mines and Energy Minister has pledged incentives if the oil companies operating in Indonesia develop their marginal fields and carry out enhanced oil recovery projects to increase production. Indonesia, Asia's only OPEC member, currently produces around 1.10 million barrels per day (bpd) of crude oil and condensate output of 150,000 bpd. It is failing to meet its OPEC quota of 1.125 million bpd as condensate is not included in that number. "There are about 60 marginal oil fields that have not been developed. If the fields can be developed then it has potential to add production between 200,000 to 300,000 bpd," Purnomo Yusgiantoro said.

"We understand to develop those marginal fields is not easy, especially in cost. We will give them incentives but case-by-case. We want oil companies to propose something to the government on how to develop these fields," he added.

Rachmat Sudibyo, head of Balak, said the government is considering reducing the share it takes of oil and gas revenue to encourage contractors to develop marginal fields. Indonesia's standard oil production contract split is 85 percent for the government and 15 percent for the contractor. "To bring the marginal fields to be economically viable, we have to reduce government sharing in the split. That is the incentive (that) can be given although the consequence is the government revenue will be less. We are considering giving a fair split which will benefit oil contractors and the government," Sudibyo said.