Indonesia Hopes to Lure the Worlds Top Oil Companies

Indonesia will hold roadshows in the U.S. and Europe later this month to lure investments from the world’s top oil companies as the former OPEC member seeks to reverse a decline in oil and gas production.

The Energy and Mineral Resources Ministry will seek bids for as many as 40 oil and gas blocks this week, Deputy Minister Arcandra Tahar said in an interview in Jakarta on Wednesday. The areas being offered will include onshore and offshore assets and those not sold in tenders in the past three years, he said.

Indonesia is trying to lure billions of dollars of investments into its oil industry to reduce dependence on imports as production slumps from its aging fields. The path has not been easy. The country, once a major crude oil shipper in Asia, only managed to sell five blocks out of 10 offered in a tender last year. The government is targeting industry’s “big boys” such as Chevron Corp., BP Plc and Exxon Mobil Corp., said Tahar, an oil and gas professional who lived in the U.S. for 20 years.


Tahar and ministry officials plan to meet oil company executives within a week after the auction announcement scheduled for Monday. Their first stop will be Houston, followed by Paris and Singapore.

“We will try to show them we have a new policy, a new fiscal regime, that’s going to be much better than the previous one,” Tahar said. “If you come and invest, the process will be simple and transparent. The message need to be conveyed clearly and loudly.”

The former member of the Organization of Petroleum Exporting Countries has switched to a so-called gross-split scheme for explorers from a production-sharing contract. The new regulation provides more certainty, flexibility and transparency for oil investors, Tahar said. His ministry has scrapped more than 50 regulations related to employment to refinery permits this year as it targets $200 billion in new investments over the next decade.

Indonesia Scraps More Regulations to Lure Investments in Energy

“With gross split, there is a certainty that you yourself count the split,” Tahar said. “If you are in early production, we are going to give better incentives, and phasing out over the cumulative production.” Explorers will get greater incentives if crude price is low and it will be reduced when prices move higher, he said.

Chevron, the second-biggest U.S. oil explorer, which has been operating in Indonesia for more than 90 years, is the country’s largest producer of crude oil, delivering approximately 40 percent of the national production from its operations in Sumatra and Kalimantan, according to its website. Exxon runs the Cepu block in Java.