PT Chevron Pacific Indonesia (CPI), unit of United States-based oil producer, Chevron Corp., (CVX.N), is considering selling its participating interest in the Indonesian Deepwater Development (IDD) gas project to other contractor - Photo by the Company

JAKARTA (TheInsiderStories) – PT Chevron Pacific Indonesia (CPI), unit of United States-based oil producer, Chevron Corp., (CVX.N), is considering selling its participating interest in the Indonesian Deepwater Development (IDD) gas project to other contractor, local media reported last week. Its subsidiary, Chevron Rapak Ltd., has created a data room to facilitate an identifying potential partners for the project.

CPI has two natural gas deepwater development projects in the country, Kutei Basin and Gendalo-Gehem in East Kalimantan. Chevron has a 62 percent interest in the Bangka project and it announced achievement of natural gas production on August 31, 2016.

The project includes a subsea connection to a floating production unit (FPU) and has a design capacity of 110 million cubic feet of natural gas and 4,000 barrels of condensate per day. A final investment decision was reached in 2014, following government approvals. CPI began the project with the drilling of two development wells in the second half of 2014.

The other project, Gendalo-Gehem, includes two separate hub developments, each with its own FPU, subsea drill centers, natural gas and condensate pipelines, and onshore receiving facility. Plans call for the produced natural gas to be sold domestically and through liquefied natural gas export. The project has a planned design capacity of 1.1 billion cubic feet of natural gas and 47,000 barrels of condensate per day. The company’ interest is approximately 63 percent.

According to the spokeswoman, Sonitha Poernomo, the search for partners was carried out because Chevron saw that the second phase of the development project was not economical if it was borne alone. She said, IDD phase two not compete for capital in Chevron’ global portfolio.

End of last year, Chevron has announced a 2020 organic capital and exploratory spending program of US$20 billion. The budget needs to support an upstream and downstream investments, highlighted by the company’ Permian Basin in Kazakhstan and an advantaged queue of deepwater opportunities in the Gulf of Mexico.

“We are positioning Chevron to win in any environment by ratably investing in the highest return, lowest risk projects in our portfolio. Our emphasis on short cycle investments is expected to deliver improved returns on capital and stronger free cash flow over the long-term,” said Chevron Chairman and CEO Michael Wirth in an official statement.

He continued, the company will reduce funding to various gas-related opportunities including Appalachia shale, Kitimat LNG, and other international projects. Chevron is evaluating its strategic alternatives for these assets, including divestment, he adds.

Previously, the Special Task Force for Upstream Oil and Gas Business Activities indicated the potential delay of the IDD project. The head, Dwi Sotjipto, said the finalization of the project probably be retreated to 2025 from initial planned in 2024.

He explained, the continuation of this project depends on the decision of partners and development plans. If until 2020 there has been no clarity on the project the project’ delay potential will be even greater.

The second phase of the IDD project is planned to have an installed capacity of 1.1 billion cubic feet of natural gas and 47 thousand barrels of condensate per day.

Currently, Indonesia’ government is negotiating with the US oil giant, its partners Italy’ ENI and China’ Sinopec Corp., to revise the development plan for IDD. The project will expire in 2027 – 2028.

US$1: Rp14,000

Written by Staff Editor, Email: theinsiderstories@gmail.com