Indonesia Awards Oil Blocks to Shell, Statoil

Indonesia Awards Oil Blocks to Shell, StatoilIndonesia Awards Oil Blocks to Shell, Statoil

Indonesia awarded 11 blocks -- eight conventional and three shale gas blocks -- with major oil and gas companies Shell, Statoil and Petronas among the winners, Naryanto Wagimin, upstream director at the energy and mines ministry, said Wednesday.

The eight conventional blocks are among the 13 that were offered by the government last year. Wagimin said the other five blocks failed to attract investor interest.

“We will bid (another) 12 oil and gas blocks this year -- two conventional blocks and 10 shale gas blocks,” Wagimin noted, Platts said in a report.

The winning companies have committed to spending $144.25 million to carry out exploration activities over three years in the 11 blocks, said acting oil and gas director general Gusti Nyoman Wiratmaja, adding the government will earn $12 million in signature bonuses.

This the first time Anglo-Dutch major Shell has entered the Indonesian upstream sector directly. The company until now has had a 30 percent working interest in the Inpex-operated Masela block.

“We see Indonesia as an interesting country to invest in -- either downstream or upstream,” Shell Indonesia’s spokesperson Sri Wahyu Endah told reporters.

Indonesia is making a concerted effort to ramp up exploration and development activity to address declining crude output at its aging fields. The country’s crude oil output peaked at 1.6 million b/d in 1995 and has since fallen.

It hovers around 800,000 b/d today and is forced to rely on imports to meet its needs. Indonesia’s proven reserves stand at 3.7 billion barrels of oil.