Abstract

During 1981 and 1982, 473 new exploration wells had been drilled and 10 thousand kilometers of seismic lines had been recorded in the Indonesian Basins. New geologic syntheses were put forward. Some of them have led to a number of new discoveries. These activities were backed-up during the last 15 years by capital support with cumulative expenditures amounting close to half a billion US dollars. Despite that, more investments will still be required for further development, and more and bigger future exploration costs will have to be spent. Such massive capital investments apparently need careful handling from both the host country and the investors, in the face of current economic situation and especially in the face of geological risks involved. It is therefore desirable, that decisions involving future investments could be eased as much as possible from the risks they have to carry.

Being a host country, Indonesia accommodates external financial support, and intends to maintain a healthy investment “climate” appropriate for foreign investments. During the last 15 years of its life, the Indonesian petroleum industry offers various incentives, intended to meet investment demands for less and less risk on returns. Yet another new risk-reducing device is still being introduced, mainly to deal with geological uncertainties inherent with exploration decisions.

The approach has been designed to encourage a wide range of possibilities, from limited studies of general level pertaining to geology, economicss and engineering up to in-depth study of specialized nature such as petroleum geochemistry, source rock study, etc.

Since decision common to exploration ventures implies basinal geology, such study could be extended into a joint study on basinal level. These joint efforts thus visualized may be appropriate in reducing investment risks in the basin, and therefore could also be regarded as an investment incentive.