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Indonesia to auction three oil-gas blocks next week

JAKARTA (RambuEnergy.com) – The Indonesian Energy and Mineral Resources Ministry plans to auction three oil and gas blocks this week as a move to lure more investment in the sector.

The three blocks to be auctioned are Makassar Strait, South Jambi B and Selat Panjang, Deputy Energy Minister Arcandra Tahar said Friday (Aug. 10).

Deepwater block, Makassar Strait, is part of the Indonesia Deepwater Development (IDD). The other two blocks that are part of IDD are Rapak and Ganal. IDD is being developed by Chevron Pacific Indonesia.

The block will be auctioned because its existing contract will expire in 2020. While Rapak and Ganal blocks will expire in 2027 and 2028 respectively.

Arcadra said Makassar Strait is a ‘stand-alone’ block. It will be developed separately.

The other two blocks Working Area (WA) South Jambi B and Selat Panjang WA contracts will expire in 2020 and 2021, therefore the blocks will be auctioned again to investors.

Makassar Strait block will be auctioned because the existing developer of IDD – Chevron Indonesia, Pertamina and Sinopec have decided not to extend their contract to develop the block on grounds that the block is not economically viable for further development, said Director General for Oil and Gas at the Energy and Mineral Resources Ministry Djoko Siswanto.

Chevron said early this year that it expects to finalize the plan of development (PoD) of the IDD project, located in Makassar Strait this year, delayed from scheduled last year.

Once this phase is completed, the company would move to the next phase, namely the front-end engineering design (FEED). The project is expected to be lower than early plan.

The IDD project is the first major deepwater project in Indonesia with previous estimated investment of USD12 billion.

In 2016, Chevron began gas production in Bangka Field within Makassar Strait, the first phase of the IDD project.

After Bangka, the next IDD projects to work on are the Gendalo and Gehem fields. The combined production is expected to reach 1.1 billion cubic feet of gas and 47,000 barrels of condensate per day.

The Special Task Force for Upstream Oil and Gas Business (SKK Migas) has asked Chevron to recalculate the cost to develop the project as previous proposed costs were considered not economically viable.

The IDD project, according to SKK Migas, will be economically viable if assumes oil price at USD70-80 per barrel, not USD100 per barrel as proposed by Chevron.

Chevron’s IDD project offshore East Kalimantan includes three blocks: Ganal, Rapak and Makassar Strait, and the development of five gas fields, namely Bangka, Gehem, Gendalo, Maha and Gandang. (*)

Written by Staff Writer

Edited by Roffie Kurniawan (email: roffie.kurniawan@gmail.com)

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