Govt picks only two winners in oil and gas block auction
- Stefanno Reinard Sulaiman
The Jakarta Post
Jakarta / Thu, May 9 2019 / 02:42 am
The government has only named two winners from the recent auction of five oil and gas blocks as other bidders failed to meet the auction requirement, a senior official has said.
Deputy Energy and Mineral Resources Minister Arcandra Tahar said the Kuwait-based energy firm Kufpec Regional Ventures (Indonesia) Ltd., and the consortium of Canada-based Sonoro Energy Ltd. and PT Menara Global Energi were named as the winners of two of the five oil and gas blocks offered in the auction.
Kufpec will develop and operate the Anambas Block in West Natuna, while the Sonoro consortium will develop the ready-to-produce Selat Panjang Block in Riau. From the auction of the two oil and gas blocks, the government secured US$109.2 million in investment commitment (KKP) for exploration activities.
Meanwhile, no winners were picked for the development of the other three oil and gas blocks, which included West Ganal Block, West Kaimana Block and West Kampar. Arcandra said as none of the bidders for the three oil and gas blocks had met the auction requirements, they would be reauctioned,
“Some of the bidders met the requirements, but some did not,” he said on Tuesday during the announcement of the winners. “The blocks that received no winners will be reauctioned,” he added
The five oil and gas blocks were auctioned in February through a regular mechanism.
Meanwhile, the Energy and Mineral Resources Ministry’s director general for oil and gas, Djoko Siswanto, said the ministry considered making some revisions to the terms and conditions of the auction of the three oil and gas blocks, especially in relation to the size of the signature bonus, which has to be paid by bidders, and the size of the investment commitment they have to provide.
Eko Lumadyo, the managing director for Indonesia of Neptune Energy Ltd., which bid for the development of the West Ganal Block, said that he was confused as why his company was found to have failed to meet the auction requirements.
He said that he was not satisfied with the deputy minister’s statement, saying that the explanation was still unclear.
West Ganal Block is a cut-off asset from United States-based energy giant Chevron’s Makassar Strait Block, which has been excluded from the mega gas project Indonesia Deepwater Development (IDD).
Arcandra said the West Ganal block would be re-auctioned even though there were already two bidders, namely Neptune Energy Ltd. and a consortium firm between state energy holding company Pertamina and Italian ENI S.p.A
“We need to get a clear and clean process. There are some questions about the bids that we need to have clarified. Hence, we decided to retender this one [West Ganal],” the deputy minister said.
On the other hand, ENI’s representative Davide Casini Ropa, the vice president of exploration in ENI Muara Bakau B.V., said that he had no problem about the retender. “It is a common thing. Sometimes a retender happens, not only in Indonesia. Although, it has happened for the first time to me since I have been here in 2016, but I see nothing strange about it,” he said.
Ato Suyanto, state energy holding company Pertamina’s project manager for West Ganal, said after the meeting that the government had asked the firm to resubmit its proposal soon in order to comply with new requirements.
“We will resubmit the proposal as there will be a revision and additional requirements from the government,” he said.
Of the 17 blocks that were auctioned last year, only nine were sold.
Commenting on the low response of investors to the government’s oil and gas block auctions, local energy watchdog Energy Watch Indonesia executive director Mamit Setiawan said it indicated that oil and gas exploration in Indonesia was no longer attractive to either local or foreign investors.
“The government should make some improvements in order to make the investment climate more attractive. Why it is no longer attractive? It is because of the gross split scheme or other problems,” he said.