Oil and Gas Block Auction Draws Little Interest

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13/03/2017 13:59 WIB

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Oil and Gas Block Auction Draws Little Interest

Oil and Gas Block Auction Bids and Bidders 2009-2017

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Oil and Gas Block Auction Draws Little Interest

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Oil and Gas Block Auction Bids and Bidders 2009-2017

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Since 2015, Indonesian oil and gas block auctions have attracted little interest. Of the 14 oil and gas blocks offered, none were attractive to investors. Similarly, in 2016, the auctioned blocks also attracted little interest. In 2016, the government again auctioned 14 oil and gas blocks, comprising 7 direct offer auctions and 7 with a regular mechanism. Only one attracted investor interest.

Low oil prices have caused investors to remain hesitant to invest in a high-risk sector such as oil and gas exploration. Furthermore, the oil and gas blocks offered by the government are mostly located in eastern Indonesia and in deep waters.

Uncertainty regarding regulations, such as Government Regulation Number 79 of 2010 concerning oil and gas taxation and cost recovery, discourages oil and gas investors from entering the domestic oil and gas sector. The government is currently preparing legal frameworks for a new gross split oil and gas contract scheme. This scheme is considered unattractive to investors due to the lack of investment cost recovery.

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."