Jakarta:(WNAM Monitoring) The discovery of two large natural gas sources in East Kalimantan and northern Sumatra seas in 2023 offers hope in supporting Indonesia’s 2030 gas production target of 12 billion standard cubic feet per day (BSCFD).
The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that 2023 was the best year for the discovery of oil and gas reserves in more than 20 years.
According to WoodMackenzie, Rystad Energy, and S&P Global, these two discoveries are among the world’s five largest discoveries in 2023.
Cooperation Contractor (KKKS) from the United Arab Emirates, Mubadala Energy, announced the discovery of large in-place natural gas reserves in the South Andaman Working Area (WK), with a potential of more than six trillion cubic feet (TCF).
The large gas discovery was found in the Layaran-1 exploration well, located around 100 kilometers off the coast of northern Sumatra.
The South Andaman WK is an oil and gas WK that was auctioned in 2018. In February 2019, the Indonesian Ministry of Energy and Mineral Resources and Mubadala Energy carried out the management of the working area, with a gross split contract mechanism.
In addition, KKKS ENI, an oil and gas company from Italy, also stated that it had discovered in-place gas reserves from the Geng North-1 exploration well in the North Ganal WK amounting to 5 TCF, with condensate content estimated at 400 Mbbls. The oil and gas WK is located around 85 kilometers off the coast of East Kalimantan.
Production acceleration
The production process was sped up to immediately optimize the two large gas sources.
SKK Migas’ Deputy for Exploration, Development, and Management of Working Areas, Benny Lubiantara, stated that most exploration oil and gas investors will choose Working Areas equipped with infrastructure and are closer to the market. Hence, these two points need to be taken into consideration to immediately optimize any source finding.
The discovery of these two large sources is expected to attract foreign investors to include Indonesia in their future investment portfolio.
Hence, SKK Migas is expecting improvements in fiscal and non-fiscal terms for ease of doing business.
Improvements in those sectors can increase the attractiveness of the Indonesian investment climate, considering that currently, Indonesia is also in a competitive mode with other countries in terms of oil and gas investment.
This discovery is also targeted to accelerate the process toward onstream or production. According to the plan, SKK Migas plans to start production activity at the South Andaman WK in 2028-2029.
Coordination
SKK Migas has also coordinated with ENI, as the operator of Geng North, to speed up the production process after the discovery of this large gas source to strengthen the national gas balance.
In addition, the production process is expected to support gas downstreaming in the area and revive Badak LNG Bontang Operations, from two trains to four trains, with gas supply amounting to 1,700 million standard cubic feet per day (MMSCFD) or equal to the production in the Abadi Liquefied Natural Gas (LNG) project in Masela block.
President Director of Mubadala Energy Indonesia, Abdulla Bu Ali, stated that the large gas discovery was part of Mubadala Energy’s future program to support Indonesia’s production target in 2030, namely one million barrels of oil per day (BOPD) and 12 BSCFD.
His side will expedite the process to start drilling other exploration wells in the same WK. Hence, Mubadala Energy needs support from various parties to realize this plan.
Ali admitted that in recent years, the Indonesian government made several improvements in terms of legal certainty and fiscal terms. Moreover, currently, the government has relaxed and provided flexibility in terms of gross split contract mechanisms and cost recovery.
