Page 9 - AsianOil Week 23 2021

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already been in decline for a number of years of 625mn boe rather than 7.4% as originally
before COVID struck, the pandemic has made thought.
matters worse. While the agency wants to approve 40 PoDs
ConocoPhillips revealed at the end of May this year, paving the way for the country to
that it was ready to exit the Corridor block, achieve its fourth consecutive year of achieving
following Royal Dutch Shell’s and Chevron’s a reserve replacement ratio (RRR) greater than
announcements in 2020 that they were ready to 100%, Wiratno acknowledged that some devel-
exit the Masela block and the second phase of the opers were facing financial difficulties.
Indonesia Deepwater Development (IDD) pro- “To achieve the target, we are currently dis-
ject respectively. While SKK Migas has repeat- cussing other PoDs, mainly those scheduled
edly said Italian major Eni will take over IDD, for approval in 2021. However, there are several
Eni has remained tight-lipped on the matter and PoDs whose submissions require incentives to
a final deal is still to be struck. help improve the economics of the field. For
Oil production slipped to 781,000 barrels per this reason, SKK Migas and the relevant [con-
day in 2019 from a peak of 1.67mn bpd in 1991, tractors] are conducting joint discussions at the
according to BP’s Statistical Review of World Ministry of Energy and Mineral Resources and
Energy 2020. the Ministry of Finance,” he said.
SKK Migas, meanwhile, has set a 2021 pro- Incentive-free PoD evaluations are expected
duction target of 705,000 bpd of oil and noted to be wrapped up in October, with Wiratno not-
last week that production was currently around ing that he hoped government approval could be
700,000 bpd. The government wants to turn this secured quickly for the others.
around and has setting a production target of He added: “Hopefully, when the incentives
1mn bpd of oil by 2030. are approved by the government, the discus-
But getting there will require a wave of new sion will speed up so that in November 2021 it
inbound investors, and that might be difficulty if is estimated that the 100% RRR target has been
the government does not move to provide those achieved.”
already on the ground with terms that make their To drive home the importance of speedy
proposed developments commercially viable. approvals, SKK Migas pointed out that domestic
For example, Tasrif’s comments came in the oil demand of 1.6mn bpd far outstrips national
wake of SKK Migas’ revelation last week that of production.
the 40 upstream plans of development (PoDs) it Wiratno said: “So, the large gap requires
hopes to approve this year, several will only pro- higher national oil and gas production so that the
ceed with fiscal incentives. deficit can be reduced and oil and gas imports
can be suppressed. The goal of producing 1mn
Second dose barrels of oil in 2030 is not enough to meet the
The agency said on June 3 that it had approved 12 national oil demand, but at least the gap with
PoDs in the first five months of this year, which consumption can be reduced.”
should boost proven reserves by 114.4mn barrels SKK Migas is trying to win the government
of oil equivalent (boe) and attract $1.34bn worth over to the idea of rolling out greater incentives
of investment. to a larger group of developers. While it remains
SKK Migas deputy head Julius Wiratno to be seen how successful the regulator is, Tasrif’s
said that the reserve figure surpassed expecta- latest comments on the subject open the door for
tions, accounting for 18.31% of this year’s target the briefest glimmer of optimism on this front.™

Week 23 10•June•2021 www. NEWSBASE .com P9