The Government of Indonesia have offered 14 oil and gas blocks in the first half of 2016, but it attracted no investment appetite. I Gusti Nyoman Wiratmaja Puja, the director general for oil and gas from the Ministry of Energy and Minerals Resources (ESDM), said that the Government has revised the existing regulation believed to be a major factor undermining investment appetite in the oil and gas sector.

The profit sharing scheme offered has been more flexible but not enough to attract the investors’ interests. And so the Government decided to revise PP No.79/2010 regarding operating cost in order to annul the tax imposed on exploration activity. After going much deliberation, the revised regulation is reportedly ready and will be released later today, Interim Minister of Energy and Mineral Resources Luhut Binsar Panjaitan told the press yesterday.

The Government has offered 14 blocks. Seven of which are offered directly:

1) Bukit Barat (offshore of Riau Island)
2) Batu Gajah Dua (Jambi)
3) Kasongan Sampit (Central Kalimantan)
4. Ampuh (offshore of Java sea)
5) Ebuny (offshore of Southeast Sulawesi)
6) Onin (onshore and offshore of West Papua)
7) West Kaimana (onshore and offshore of West Papua).

And the other seven blocks offered via regular auction scheme:

8) South CPP (offshore of Riau)
9) Suremana I (offshore of Makassar Strait)
10) SE Mandar (offshore of Southeast Sulawesi-West Sulawesi)
11) North Arguni (West Papua)
12) Kasuri II (West Papua)
13) Manakarra Mamuju (offshore of Makassar Straits)
14) Oti (offshore of East Kalimantan).

The Government will offer said blocks again, including other new 4-6 blocks in Natuna East, one of the world’s largest gas reserves. There were ideas to invite Chinese oil and gas company as partner in the block, but somehow PetroChina opted not to proceed, reportedly because of China’s view about South China Sea. Indonesian government then invited European partner (Total E&P, 15%) and Southeast Asian Partner (PTT, 15%) to become partners for Pertamina (35%) and ExxonMobil (35%).

OTHERS

State oil and gas firm PT Pertamina through its subsidiary PT Pertamina Internasional Eksplorasi dan Produksi (PIEP) records oil and gas production of 120,000 barrels oil equivalent per day (boepd), surpassing the target of 104,950 boepd. Oil production reached 85,880 boepd while gas production accounted for 201.15 mmscfd. In 2015, PIEP recorded production of 95,000 boepd from overseas oil and gas blocks (Algeria, Iraq, Malaysia).

Iraq block (West Qurna 1) contributed 43,700 boepd. Algeria block contributed 41,130 boepd (MLN, EMK, and OHD fields). Malaysia block contributed 35,770 boepd (South Acis, Permas, and Blok K fields). PIEP is optimistic to achieve production target of 127,000 boepd by 2017, supported by workover activity in 57 wells and waterflood implementation in 20 wells. PIEP is also in process to acquire 24.5% shares in Maurel&Prom. PIEP allocates investment of US$100 million for this year, a 40% rise from last year.

The Upstream Oil ang Gas Regulatory Task Force (SKKMigas) said oil production from Banyu Urip field, operated by EMCL, subsidiary of ExxonMobil, is targeted to reach 200,000 barrels per day (bpd) in 2017, from current 165,000 barrels bpd, to support national target of 815,000 barrels bpd production.

SGX-listed Ramba Energy Limited expects to expand its oil and gas output at Akatara-Selong (Lemang Block in Sumatra’s Riau Province) to 11,000 barels per day (bpd). It has already embarked on front-end engineering and design studies on a proposed pipeline to PetroChina’s production facilities in the nearby Jabung block that will support the expansion of output at Akatara-Selong. Ramba said the cluster field development will also produce at its peak another 26 million cubic feet (736,000 cubic meters) per day of gas. The new pipeline is not expected to enter operation until the end of 2017.

Meanwhile the Government of Indonesia managed to auction 5 geothermal areas with capacity of 480 megawatts (MW). That said blocks are Simbolon Samosir (110 MW) in North Sumatera, Graho Nyabu (110 MW) in Jambi, mountains of Galunggung and Ciremai (110 MW each) in West Java, and mountain of Pandan (40 MW) in East Java. The government targets to auction 8 geothermal areas this year, part of 21 blocks targeted for 2016-2017 period with total capacity of 1,065 MW. Indonesia has geothermal potential of up to 29,475.5 MW.

DISCLAIMER: AUTHOR HAS NO POSITION IN STOCKS MENTIONED

By Yohannes Obor

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