Various news reports by the Asian media quoted the Energy Ministry’s upstream petroleum director R. Priyono as saying the incentives gave petroleum companies more flexibility.

“If after only two or three years of exploration they consider the area unpromising, they could return the rights to the Government,” the Jakarta Post quoted Priyono as saying.

Currently, companies are granted six-year exploration rights.

The newspaper reported Priyono admitted the blocks would be difficult to explore because they were mostly located in deepwater areas of Papua and Nusa Tenggara.

He said the 30 blocks would be offered through regular tenders and direct offers in two phases, starting in May or June.

Ageing fields and a lack of new exploration mean Indonesia has suffered a major decline in its oil output over the past several years. Once a major oil producer in the Organisation of Petroleum Exporting Countries, the country is now a net oil importer.

The Government is targeting 1.3 million barrels of oil production per day by 2009, compared to the current 1.06MMbopd.