Indonesia's changes to oil, gas deals "positive" for investors - association

Indonesia's changes to oil, gas deals "positive" for investors - association

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.[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.

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Link to Original Article:
https://www.reuters.com/article/indonesia-energy/indonesias-changes-to-oil-g
as-deals-positive-for-investors-association-idUSL4N1LM30V

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com