Indonesia May Hold Back New Oil Blocks Offer

BANGKOK (Dow Jones Newswires), August 7, 2008

Indonesia is likely to suspend a round of bidding for new oil and gas blocks scheduled for October due to poor uptake in the previous round, a senior official at the Ministry of Energy and Mineral Resources said Thursday.

"Only 9 out of the 25 blocks were taken," Luluk Sumiarso, special adviser to energy minister Purnomo Yusgiantoro, told Dow Jones Newswires.

"It's due to many things - some (bidders) told us there's not sufficient data. We need to study the problem."

Sumiarso, who about three weeks ago ended his appointment as head of Indonesia's Directorate General for Oil and Gas - the agency responsible for upstream bidding - said potential investors should consider developing the country's deepwater oil reserves.

"Also CBM, not only oil and (natural) gas," he said of coal-bed methane.

In an interview on the sidelines of a regional energy security dialogue, Sumiarso said Indonesia's CBM reserve potential may be "three times that of gas," and only three development contracts have been signed and two more on the way.

Indonesia - East Asia's only member of the Organization of Petroleum Exporting Countries - has turned net oil importer in recent years due to a lack of new oil discoveries attributed to a slowdown in upstream investment.

"There's (also) a problem in obtaining rigs. Rigs availability is an issue. There's too many people who need rigs at the same time," he said.