JAKARTA (TheInsiderStories) - The special task force for upstream oil and gas business activities (SKKMigas) invited investor works on the East Natuna Block (Natuna D-Aplha), said the chairman last week. This large natural gas field is located in the South China Sea off the north of Natuna Islan, in Riau province.
The head, Dwi Soetjipto, hope that the gas blocks that have been discovered since 1973 to become a gas reserve giant in the future. According to the former CEO of Pertamina and PT Semen Indonesia Tbk (IDX: SMGR), the block is estimated to have 222 trillion cubic feet (TCF) of resources.
However, due to the large amount of carbon dioxide (Co2) in this block, reaching 71 - 72 percent, the gas that can be exploited is only around 46 TCF. But, this potential is much bigger than the Masela Block, which is around 10.7 TCF and bigger than the Tangguh Field.
While, the director General at the energy and mineral resources (EMR) ministry, Tutuka Ariadji, said at the meeting with parliament last week, if the gas reserves in the East Natuna Block are exploited, gas production could potentially reach 8,000 million cubic feet per day (MMSCFD).
According to Wood Mackenzie’ Asia Pacific Research director, Andrew Harwood, assessed that currently the attractiveness of Indonesia’ upstream oil and gas industry is still lagging behind other countries despite a number of improvements that have been made. He explained that more efforts are needed so that Indonesia can be more competitive.
A number of positive efforts, such as providing contract flexibility and incentives, must not stop at that point, because other countries continue to develop improvements in the investment climate. He gave an example, currently Brazil and Iraq are classified as more attractive to investors even though the country’s investment index is better.
“Investors will look at the fiscal term but also look at the accumulated prospects for oil and gas. Brazil in 2010 is the” hottest “investment place and this attracts big investors. Likewise with Iraq, although its fiscal is not very good but the prospects are good,” said Harwood in a virtual discussion on Thursday (11/19).
In the past, he continued, oil and gas companies were only eyeing an increase in production. This trend is slowly changing as companies are starting to see the revenue they can generate from production. To that, the government needs to pay attention to a number of aspects such as oil and gas splits, subsurface attractiveness and providing attractive profit sharing for investors.
“How can investors compensate for losses in one block with production from other blocks. This does not exist in Indonesia, so it is difficult for companies to build a base in Indonesia,” said the analyst.
Harwood stated, that the regulatory climate also needs to be considered, especially regarding the acceleration of licensing and investment. This is because other countries continue to make system changes to make it more competitive, so Indonesia must also keep trying to be competitive.
On the government plans to produce one million barrels oil per day in 2030, he assessed that this condition is considered attractive, although many investors have entered, but are still classified as small scale. Small oil and gas companies do not have jumbo funds for exploration and implementing Enchanced Oil Recovery. This requires fiscal support from the government.
“Big guy leaving is not always bad because what is not their main asset can be a major asset for small companies. They must be excited when many small companies enter,” concluded by Harwood.
Written by Editorial Staff, Email: theinsiderstories@gmail.com
