WASHINGTON: US energy giant Chevron Corp must compete if it wants to continue operating Indonesia’s Rokan block, the country’s biggest source of crude oil, after its contract expires in 2021, Indonesia Energy and Mines Minister Ignasius Jonan said on Wednesday.
Chevron asked Indonesia’s government earlier this year to extend its operating contract for Rokan beyond 2021 and since then has been in discussions with Indonesian officials on the issue.
“I just talked to Chevron’s new CEO and told him that it is up to him. If they propose to continue to operate the Rokan block the economics have to be justifiable,” Jonan told Reuters on the sidelines of the World Gas Conference in Washington.
“And they may face some competition as well, from foreign operators and from Pertamina,” he said, referring to Indonesia’s state oil and gas company.
Michael Wirth, who has been with Chevron since 1982, became CEO in February.
A Chevron spokesman did not immediately respond to a request for comment.
Indonesia has earned a reputation for favoring Pertamina to take over expiring oil and gas contracts in the past, stoking concern among foreign energy investors about the security of their projects.
Jonan, who said he is eager to earn the trust of investors to boost development of Indonesia’s natural resources, said the days of playing favorites were “in the past.”
“The only maxim we stick to is the economics. There is no favoritism about the origin of the company, there is no political play.
“The answer is no and no. It is the economics. That applies to everyone, foreign companies, local companies, and government companies,” he said.
Jonan said Indonesia was also in discussions with Chevron about another project it is operating, Indonesia Deepwater Development, a natural gas production effort in East Kalimantan, after Chevron cut US$6 billion in spending plans there.
“We both agreed to go and find the best way to work on this block for both sides,” he said, adding the negotiations now “will go down to the technical level.”
Jonan said he had not yet used his authority to adjust fiscal terms for oil and gas blocks to encourage investment, but was ready to do so in any cases where investment returns were projected to be below 15 per cent. — Reuters