Geological studies as a risk-reducing factor in exploration ventures with special references to the South China Sea

Gatot K. Wirojudo

Energy, 1985, vol. 10, issue 3, 517-523

Abstract: During 1981 and 1982, 40 new exploration wells had been drilled and 10,000 km of seismic lines had been recorded in the Indonesian East and West Natuna basins. New geologic syntheses were developed and have led to new discoveries. During the last 15 years these activities were supported by cumulative expenditures amounting to nearly U.S.$.5 billion. However, more investments will be required for further development. With the present economic situation and the geological risks involved, such massive capital investments need careful handling from both the host country and investors. It is therefore desirable that risks involving future investments be reduced as much as possible. Being a host country, Indonesia intends to maintain a healthy investment climate for foreign investments. During the last 15 years the Indonesian petroleum industry has offered various incentives to meet investor demands for less risk on returns. Another risk-reducing device is being introduced to deal with geological uncertainties inherent in exploration decisions. The approach has been designed to encourage a wide range of possibilities, from limited studies of regional geology, economics, and engineering to in-depth study of petroleum geochemistry and source rocks. Since decisions on exploration ventures involve knowledge of basin geology, joint studies may reduce investment risks in the basin and therefore can be regarded as an investment incentive. Because of its unique geology, the Natuna basins area can be used as a model.

Date: 1985
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:10:y:1985:i:3:p:517-523

DOI: 10.1016/0360-5442(85)90066-0

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