Minerals Report - International Seabed Authority

and cooperation with Pertamina and the Indonesian Government has
been useful. Currently, under the difficult circumstances in Indonesia,
about 50 oil and gas companies are operating in Indonesia, through
170 production-sharing contracts. These include most of the world’s
biggest and prominent companies.
4. In general, offshore mineral producing operations have been smooth
and free of conflicts compared to land-based exploration and
exploitation of minerals.
Ambassador Djalal reiterated that his paper does not deal with joint
development zones in which Indonesia has a lot of experience in the South
China Sea (Malaysia and Vietnam) and Timor Sea (Australia), or with offshore
mining of hard minerals.
SUMMARY OF THE DISCUSSIONS.
The discussions following Ambassador Djalal’s presentation focussed
on the types of contracts that are awarded for natural gas, the distinction
between Pertamina and the Government of Indonesia, activities undertaken
by Pertamina in oil and gas development, whether Indonesia’s new oil and
gas law contemplates the use of concession agreements, the adequacy of a rate
of return of 19 per cent, and how Indonesia ensures that costs that may be
recovered are not genuine.
One participant noted that during Ambassador Djalal’s presentation,
he had referred very quickly to contracts for the development of natural gas.
This participant wanted to know the types of contracts entered into for
natural gas production. Ambassador Djalal said that for natural gas, in
Indonesia two possibilities are recognised. The first is to flare the gas for
which approval is required, and the other is to process it to liquefied natural
gas. He said that in the case of the latter, the natural gas is produced
separately under conditions more favourable to the company. He also said
that natural gas production occurs in many places in Indonesia, in particular
off the Natuna Islands in the South China Sea, and in East Java. He informed
INTERNATIONAL SEABED AUTHORITY 878