14. Paper (2017): An Analysis on The Phenomenon of Fallow Assets in Indonesian Exploration blocks

by Yogi Alwendra and Trian Hendro Asmoro

Exploration projects as the only way to increase oil and gas reserve and production for Indonesia have not however shown a progressive trend in the last decade, even though some fiscal incentives and new regulations might have been introduced to support such projects. It is therefore the phenomenon of fallow assets may happen in the exploration blocks. Fallow asset that is classified as fallow block and fallow discovery is an asset which has no activity, i.e. seismic or drilling, for a certain period of time according to its term.

Another report published by Ministry of Energy and Mineral Resources (EMR) regarding analysis and evaluation of data package in the offering process of oil and gas fields (2014) mentioned that the current trend has shown a deteriorated interest of oil and gas companies to bid the fields offered by the government. The report investigated some technical and non-technical aspects should be covered in the governmental tender document.

This paper will describe the profile of exploration projects and some relevant key information of oil and gas exploration blocks under production sharing contract (PSC) terms in Indonesia. Furthermore, the exploration commitment and its realised activity will be analysed. Finally, some recommendations would be proposed to balance the interests between government and investors (companies) in order to attract more investment in exploration projects.

Keywords: bidding process, exploration, fallow asset, Production Sharing Contract (PSC)

* Presented at Indonesia Petroleum Association (IPA) Convention and Exhibition 2017