Investors show more interest in Indonesian oil, gas tenders

09:00, May 17, 2010      

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Indonesia's Energy Ministry officials said that the government had awarded drilling rights in 14 oil and gas areas in a tender, declaring the results a "relief" after similar tenders last year failed to attract any bidders, local media reported here on Saturday.

The successful tender came after the government dropped a proposal to limit cost-recovery by oil and gas companies in late April. Last year, tenders for 17 blocks went largely ignored by investors, many of whom cited uncertainty over government proposals to limit cost-recovery expenses as a factor.

Cost-recovery is a process whereby contractors are reimbursed for expenses incurred in the development and operation of the block.

International firms including Spanish giant Repsol, Canada's Talisman Energy and Thailand's PTT Exploration and Production were among those awarded drilling rights. Local companies winning rights included PT Sargas &Vega and PT Cakra Nusa Darma.

The tenders come as the nation struggles to reverse its declining oil production, a phenomenon which saw it drop out of the Organization of Petroleum Exporting Countries in 2008.

Late last month, just after the government reversed its stance of cost recovery, a survey released by PricewaterhouseCoopers showed that the country was "losing its shine" for oil and gas investors.

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