Indonesia encourages oil firms to go into deep sea

JAKARTA, May 9 – The Indonesian government is pushing oil and gas companies to carry out exploration toward deep-sea where the potential to find large reserves of hydrocarbon is big, paper quoting a senior government researcher as saying on Wednesday.

“More than 60 percent of oil and gas potential in Indonesia are located in deep-sea locations,” Ridwan Djamaluddin of the Agency for the Assessment and Application of Technology (BPPT) was quoted by the Jakarta Post as saying.

“They remain largely untapped, “the BPPT natural resources technology development deputy chief said, adding that deep-sea oil exploration entailed more risks and required a huge capital outlay and high technology.

With world oil prices hovering above $100 a barrel since the beginning of 2012, prospects for oil in deep sea locations in Indonesia may become commercially viable. Most of Indonesia’s oil production currently comes from onshore and shallow waters.

But there hasn’t been major significant findings in the last decades, resulting in Indonesia’s overall hydrocarbon reserves depleting fast.

Indonesia’s oil reserves fell to 4.04 billion barrels in 2011 from 4.3 billion barrels in 2004, according to figures from the Energy and Mineral Resources Ministry, while crude production declined to 289 million barrels from 354 million.

The government is laying on more incentives to encourage deep- sea oil prospecting. The Energy and Mineral Resources Ministry has asked the Finance Ministry to waive land and building taxes for companies exploring oil and gas in deep seas and import duties on their capital goods.

The government has agreed to give a higher share of oil to companies operating under the production sharing contract if they explore deep sea locations.

Currently, the government takes 85 percent of the oil production and the remaining 15 percent goes to the oil contractor. For deep-sea oil explorations, the government offers a split formula of 65:35 in its favour.