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Indonesia mulls revoking oil exploration licences

Indonesia is considering revoking licences of oil companies that fail to start developing oil and gas fields within 10 years, a senior government official said on Monday.

business Updated: May 29, 2007 04:28 IST

Indonesia is considering revoking licences of oil companies that fail to start developing oil and gas fields within 10 years, a senior government official said on Monday.

Indonesia, OPEC's second-smallest producer, has been offering new exploration rights and financial incentives for oilfields in a bid to stem a steady decline in production as the country has failed to tap new oilfields fast enough to meet domestic demand.

"We will see the contracts. If the companies do not meet their commitments on exploration after the 10-year period, we will revoke their licences," the oil and gas director general, Luluk Sumiarso, told Reuters by phone.

He said the government would consider problems facing oil firms before taking a decision.

"We understand that there are some problems faced by companies such as land clearing and difficulties to find rigs for exploration. For these reasons, we may extend their licences," Sumiarso said.

"If they have the contracts but are doing nothing then we will terminate them."

The country gives oil companies a 10-year period for exploration and drilling for oil and gas, but mines and energy ministry documents show that several oil firms are still exploring after the 10-year deadline.

Indonesia oil watchdog BPMIGAS said the companies should develop the fields within 10 years if they find oil.

"Some companies have already drilled the wells and found oil. But some of them need more time to develop," Achmad Luthfi, BPMIGAS deputy chief, said.

Among the firms that may be affected are France's Total for the Saliki block in the Makassar Straits, U.S. ConocoPhillips for the Warim block in Papua, and Medco for an onshore block in Madura island.

Indonesia says it has 8.6 billion barrels of proven and potential oil reserves and about 182 trillion cubic feet of natural gas reserves.

Indonesia's crude oil output fell 1.5 percent to 838,900 barrels per day (bpd) in April from March after technical problems at several oil wells.

The country's condensate output also fell slightly to 114,200 bpd in April from 114,700 bpd in March.