Page 8 - AsianOil Week 36 2021

AsianOil SOUTHEAST ASIA AsianOil

Indonesia awards two new onshore blocks

PROJECTS & INDONESIA’S ongoing quest to turn around
COMPANIES declining oil and gas production took another
step forward this week with the country’s first
award of exploration blocks in nearly two years.
The Energy Ministry revealed this week that
it had awarded the onshore South CPP block in
Sumatra to locally owned Energi Mega Persada and
the onshore Liman block in Java to Canada’s Husky
Energy. The two blocks are the first to be awarded
from the six that were offered to bidders in June.
In addition to hailing the award as a sign that
upstream investors remained upbeat about the
country’s upstream potential, the government
also made it clear that despite ongoing invest-
ment in energy transition projects the oil and
gas sector remained a core component of the
country’s long-term growth strategy.
Winning bids
Energi Mega’s bid for South CPP included a
$500,000 signature bonus as well as a three-year,
$13.6mn work programme, the energy minis-
try’s director for oil and gas, Tutuka Ariadji, told
a virtual conference on September 5.
The local company has committed to acquir-
ing both 500 km of 2D seismic data and 50 Economic pillar
square km of 3D seismic, as well as drilling one The minister told the Indonesian Petroleum
exploration well. Association (IPA) Convention and Exhibi-
Husky Energy, meanwhile, offered a $200,000 tion on September 6 that the government’s the
signature bonus while committing to three-year, National Grand Energy Strategy, which is still
$6.7mn work programme that will see it acquire being drafted, would focus on boosting oil and
400 km of 2D seismic data. gas production at the same time as the country
South CPP’s recoverable reserves are esti- pursued carbon emission reductions.
mated to comprise 49.1mn barrels of oil and “A measured transition process is necessary,
87.09bn cubic feet (2.47bn cubic metres), while and the oil and gas sector remains of strategic
Liman is estimated to hold 316 bcf (8.95 bcm) of importance in this transition,” he told delegates.
recoverable gas reserves. State-owned Pertamina The minister explained that greater domestic
has the right to a 15% participating interest in consumption of natural gas and the adoption of
both blocks. electric vehicles (EVs) would help reduce the
“I hope this gives a positive signal of Indone- country’s need for imported oil.
sia’s promising upstream oil and gas investment Such a strategy should help to reduce the
amid current challenging global conditions,” country’s oil consumption and cut its oil import
Ariadji said. bill, even as domestic oil and gas production
The other four blocks that made up the June remains relatively untouched.
bid round were Subagsel and Merangin in Suma- He said the country’s oil and gas sector had
tra, and Rangkas and North Kangean in Java. contributed INR47.58 trillion ($3.34bn) to the
The six blocks are estimated to hold more than country’s non-tax state revenue of INR83.14 tril-
900mn barrels of oil. lion ($5.83bn) in the first seven months of the
The block awards are an important step for year.
the country as it seeks to turn around a slide in Institute for Essential Services Reform (IESR)
its upstream fortunes. National crude and con- executive director Fabby Tumiwa told the Jakarta
densate production has steadily declined from Post that the transition towards EVs would take
a peak of 1.67mn barrels per day in 1991 to just a long time. The institute has warned that with
743,000 bpd in 2020, according to BP’s Statistical EV utilisation in Indonesia only likely to reach
Review of World Energy. Gas production, mean- 40% by 2050, and without alternatives such as
while, has contracted from a peak of 87 bcm in hydrogen, the country’s demand for motor fuels
2010 to 63.2 bcm last year. would remain high.
Indeed, Indonesian Energy Minister Arifin “The energy transition strategy must chal-
Tasrif moved to reassure the upstream this week lenge conventional thinking,” Tumiwa told the
that despite the government’s energy transition local daily, noting that one solution would be to
initiatives, oil and gas were set to remain a prior- introduce synthetic fuels to replace gasoline and
ity in the long run. diesel.™

P8 www. NEWSBASE .com Week 36 09•September•2021