ConocoPhillips Eyes Indonesia Exploration Areas

ConocoPhillips has applied for an exploration block in Indonesia, a senior Mines and Energy ministry official said on Tuesday. "There are eight companies that have applied for exploration in eight Indonesia areas through their own selection. One of those companies is ConocoPhillips," Director General Oil and Gas Iin Arifin Takhyan told reporters.

The eight areas were offshore West Natuna, offshore Biliton in south Sumatra, onshore Central Kalimantan, offshore Selawati in Papua, onshore Asmat in Merauke's Papua, offshore Halmahera in North Moluccas, onshore South Sumatra, and offshore Bontang in East Kalimantan.

Iin said because the areas were selected by the companies, the government will advertise the blocks to see if there are any other firms interested. "We will give one month to other companies to apply and to show their working program in any those blocks. Then we will select the one that is the best for Indonesia," he said. If there were no applications the blocks would be awarded to those who had already chosen them, Iin said.

"We will sign more oil production contracts before the year end which will include the areas that we already awarded in August to Santos and the areas applied for by the companies through their own selection. The signing is expected in November," he added.

Earlier this year, Indonesia had opened for tender 11 areas for gas and oil exploration -- five off the coast of East Java province, one off north Central Java, two in north Bali, two in Jambi province on Sumatra island and one in East Kalimantan on Borneo island.

Out of the 11 blocks, eight were bid. Last month, Indonesia announced the awards of those blocks to eight companies. One of those firms was Santos Ltd, which was awarded an oil and gas exploration block offshore Bali island. However production sharing contracts have not been signed yet.

Iin said in the future oil and gas companies will be allowed to select on their own in areas which had already been tendered but drew no bidder.

In 2002, Indonesia opened 17 areas for tender but only one was bid. "Indonesia is still attractive to oil investors. But we will seek other possible give more encouragement to investors to come," Iin said.

Iin said Indonesia is expected to open 10 new oil and gas blocks for tender at the end of this year.

The 10 areas planned to be opened would include one in onshore Sumatra, one block south of Banten (West Java), three offshore blocks north of East Java, one offshore West Timor, two blocks off Tanimbar in Moluccas province, one block offshore in Papua province and one onshore.

Iin said government institutions, including the mines and energy ministry, are currently in talks on government regulation of upstream oil and gas activities.

He said one point under discussion was a proposal to allow oil companies to apply for a contract extension of 10 years, if they applied no later than two years before the contracts were due to end.

"We also propose to give flexibility to gas companies in extension of contracts, because of the liquefied natural gas (LNG) contracts with foreign buyers which are related with them," Iin said.

He said such gas companies may get the fastest extension of contracts because of their importance in providing the feedstock for LNG, a critical Indonesian export.

Indonesia currently produced approixmately one million barrels per day (bpd) of crude oil and 130,000 bpd of condensate.