Page 5 - AsianOil Week 29 2022
P. 5
AsianOil COMMENTARY AsianOil
Seeking investment government has also lowered its shareable first
The shortfall in output this year could represent a tranche petroleum (FTP) rate to 10% from 20%
setback to Indonesia as it pursues a longer-term in an effort to attract more bidders. FTP is the
target of 1mn bpd of oil production and 12 bcf portion of oil or gas produced and set aside
(340 mcm) per day of gas output. Jakarta has before deductions are made for recovery of
previously estimated that it would need $187bn operating and production-handling costs.
worth of investment in its upstream sector in The Arakundo block could attract the most
order to meet the 2030 target. However, invest- attention given its proven petroleum system and
ments in the country’s oil and gas over the first proximity to market, as well as other discover-
half of the year reached $4.8bn, which represents ies in the same region. However, there have
just 36% of this year’s target of $13.2bn, and if been warning that these previous discoveries
this trend continues, meeting the longer-term have been difficult to commercialise owing to According to the
target will be difficult. high levels of carbon dioxide (CO2). In a world
The Indonesian government is now attempt- focused on decarbonisation, justifying the ministry, Jakarta
ing to boost investment via its first bidding development of CO2-rich discoveries can be has improved
round for 2022. The round, launched on July expected to become increasingly difficult.
20, consists of six blocks on offer, representing the terms on
a mix of near-field and frontier resources. The What next?
blocks are estimated by the Indonesian Minis- It remains to be seen how much interest the bid offer to potential
try of Energy to hold total potential resources of round may attract. Higher oil and gas prices
3.94bn barrels of oil and 14.08 trillion cubic feet may serve to encourage investors, given expec- investors.
(399bn cubic metres) of gas. tations that global demand will continue rising
The blocks on offer are offshore Northwest and more countries will seek out oil and gas that
Aceh, offshore Southwest Aceh, Arakundo in does not come from Russia in the wake of the
Aceh, Bawean in offshore East Java, Bengara 1 war in Ukraine.
in North Kalimantan and Maratua 2 in offshore On the other hand, bid rounds are also cur-
Makassar Strait. Five of the blocks are explora- rently underway in Malaysia, Thailand and
tion working areas and one is an exploitation China, representing a potential source of
working area. competition for investor dollars. Against this
According to the ministry, Jakarta has backdrop, Jakarta may have to do even more to
improved the terms on offer to potential make its offerings attractive. Further regulatory
investors, giving contractors a better split and changes that result in more favourable condi-
offering flexibility on production sharing. The tions for investors may be required.
Week 29 22•July•2022 www. NEWSBASE .com P5
