INDONESIA - Over 30 Blocks To Be Offers.

Minister Purnomo on Jan. 17 told reporters his Oil and Gas Directorate will offer at least 30 new oil and gas blocks later this year to foreign and local companies in an attempt to boost the country's sagging oil output. "We will offer the new blocks in an effort to boost our oil and gas reserves".

Indonesia for the first time became a net crude oil importer in March 2004, due to falling reserves, while new investment in the petroleum sector has been hampered by conflict-ing regulations. The Ministry on Dec. 13 signed 15 oil PSCs with companies including Anadarko, Unocal, Petronas and Agip. Minister Purnomo then said: "The contractors have committed for exploration spending of around $200m". Anadarko was to explore the Madura III block and Petronas the Madura IV, both offshore north-east Java. ENI would explore the offshore Bulungan block in East Kalimantan. Unocal would explore the disputed East Ambalat block (see above). The rest of the PSCs were signed mostly with local companies. "The signing of contracts today will boost Indonesia's oil production in future and open job opportunities to our people", Purnomo said.

President Yudhoyono, a former general who once served as mines and energy minister, told oil executives in a dinner speech during an international energy conference in Jakarta in late 2004 Indonesia needed foreign oil investors to operate in the country. He added: "In the upstream oil and gas sector, BPMigas...will closely monitor investment levels to ensure that terms are internationally competitive... The government will strengthen regulation and improve legal certainty to create a more conducive businesses climate for the private sector". He added: "I know a lot of you have tax issues in your mind. On this issue I have acted to review and study the existing tax and custom policy to find a more sound (one) that I hope will boost more investment in the years to come".

Vice President Jusuf on Dec. 13 said the government planned to modify the country's taxation system to attract more foreign investment in the gas and oil sectors. "We need to review and improve our taxation system", he told reporters on the sidelines of the same conference. Jusuf said the government was considering scrapping import duties for equipment used in developing gas and oil blocks jointly operated by the government and foreign partners. This is because, under an existing cost-recovery scheme for foreign investors, the equipment will eventually be owned by the government. Jusuf said the government was to free companies exploring in Indonesia from the VAT. He did not provide a timeframe for implementation of these measures. Increasing foreign investment in the petroleum sector is crucial to Indonesia's efforts to boost its dwindling oil output.