A recent ownership shakeup at two major Indonesian gas projects has injected renewed hope in the country's upstream gas sector, as the country hopes to tap into its rich hydrocarbon resources amid global energy transition, but barriers remain.
INDONESIA DEEPWATER DEVELOPMENT (IDD)
Located in the Makassar Strait off the island of Borneo, IDD consists of two projects, Bangka and Gendalo-Gehem, with combined recoverable gas resources of nearly 3 trillion cubic feet (Tcf).
Last month, operator Chevron signed a deal to sell its 63% stake to project partner Eni ENI.MI of Italy. Other IDD stakeholders include China's Sinopec and Indonesian state producer Pertamina.
Chevron's initial development plan for the project was approved by the government in 2008. The company submitted a revised plan in 2018. IDD's total investment cost is estimated at $6.98 billion, according to Indonesia upstream oil and gas regulator SKK Migas.
Production at the smaller Bangka project started in 2016 with a capacity of 110 million cubic feet a day (cfd) of gas and 4,000 barrels per day (bpd) of condensate.
Gendalo and Gehem could be Indonesia's deepest offshore gas fields at water depths of up to 6,000 feet (1829 m).
As of 2022, SKK Migas said the Gendalo-Gehem project will have an estimated peak gas output of 844 million cfd, aiming to start production in 2027, subject to a revised development plan to incorporate Eni's existing gas production facilities nearby.
Eni produces gas from the Jangkrik and Merakes fields, near IDD in the Kutai basin, and processes it on the Jangkrik floating processing unit.
Eni has also been awarded the West Ganal and East Ganal exploration blocks in the same basin.
In June, Eni announced it is buying Neptune Energy, its partner in the exiting Kutai basin projects.
The production sharing contracts for the three gas fields in IDD are due to expire in 2027 and 2028. The companies involved are expected to propose contract extensions and re-negotiate fiscal terms.
MASELA PROJECT
The Masela gas project, also known as Abadi LNG, is located off the Tanimbar islands in Maluku province and is operated by Japan's Inpex 1605.T, which has a 65% stake.
The Masela gas block has proven reserves of 18.5 Tcf and 225 million barrels of condensate, while the LNG plant is expected to have production capacity of 9.5 million metric tons per annum (1.6 bcfd) at its peak.
The project is estimated to cost nearly $20 billion, according to SKK Migas.
Shell agreed in July to sell its 35% stake in the project to Indonesia's Pertamina and Malaysian state energy firm Petronas.
The project has been delayed after Inpex revised its development plan following a 2016 order by President Joko Widodo to move the proposed LNG plant onshore from an earlier plan for offshore development, in order to benefit the local economy.
The onshore plan was approved in 2019, along with an extension of Masela's PSC to 2055.
In April, Inpex submitted a revised development plan to incorporate carbon capture and storage and reduce costs, aiming to start production in the early 2030s.
Indonesia strategic gas projects https://tmsnrt.rs/3KytwtI
(Reuters - Reporting by Fransiska Nangoy; Editing by Florence Tan and Sonali Paul)
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