Page 7 - AsianOil Week 38

AsianOil SOUTH ASIA AsianOil

the Bassein gas field, which lies offshore Maha- ongoing struggling with accidents in the oil and
rashtra State. gas sector.
The explosions and fire have forced state-run State-run Oil India Ltd (OIL) has only just
gas pipeline operator GAIL (India) to cut sup- managed to get a well fire at its Baghjan gas and
plies to customers by around 40%, Reuters citing condensate field in Assam State under control, a
an unnamed company source as saying. GAIL little more than three months after it first started.
supplies about 60mn cubic metres per day of The developer experienced a blowout at the
gas through its north-western pipeline grid, the Baghjan-5 well on May 27 after it tried to bring a
newswire said, noting that the majority of supply new reservoir on stream. This led to “uncontrol-
went to power and fertiliser companies. lable” flows of gas and condensate that eventually
The explosion comes a day after the Times of caught fire on June 9.
India reported a leak at one of ONGC’s under- OIL diverted the well on September 14 and
ground oil pipelines in Tamil Nadu State, which expects to begin well-killing operations within
contaminated an acre (4,047 square metres) three-four weeks, spokesperson Tridib Hazarika
of farmland. The incidents highlight India’s local news outlet ThePrint.™

SOUTHEAST ASIA

Indonesia secures contractor

production commitments

PROJECTS & INDONESIA’S upstream watchdog has SKK Migas has already trimmed its 2020 oil
COMPANIES announced a new agreement with the country’s production target by 4% to 725,000 bpd, while its
oil and gas contractors that aims to ensure the gas target has been dropped by 14.2% to 5.73 bcf
country’s long and short-term production tar- (162.27 mcm) per day.
gets are met. With production dwindling, the government
SKK Migas head Dwi Soetjipto said his introduced new legislation in July that will allow
agency had secured agreements and commit- developers to choose between cost recovery or
ments from 98 contractors during a virtual gross split-based production-sharing contracts
industry event that it hosted on September 23. (PSCs).
Soetjipto said the contractors had agreed The move has been praised by Wood Mac-
to fulfil the government’s production target kenzie, with the energy consultancy saying on
of 705,000 barrels per day and 5.64bn cubic September 17 that it was “a positive step forward
feet (159.72mn cubic metres) per day in 2021. for Indonesia’s upstream sector”. Senior petro-
Moreover, the contractors have also committed leum economist Nikita Golubchenko said the
to helping the government achieve its goal of gross split system had been most effective for
producing 1mn bpd of oil by 2030. expiring contracts.
Soetjipto said it had held the forum to help the “Higher oil prices, significant cost efficiencies
private sector brainstorm with SKK Migas on how and lesser bureaucratic approvals play in favour
to meet the government’s production targets. of gross split terms for licence extensions. As pro-
“From the existing discussion, [the contrac- ject risk parameters are lower than in exploration
tors], among others, asked for support for the blocks, investors may negotiate additional splits
massive licensing process, as well as accelerated necessary to reach hurdle rates,” Golubchenko
commercialisation so that field development can added.
be carried out immediately, and the transforma- The consultancy noted, however, that “vague
tion is carried out quickly,” he said. criteria” for the discretionary ministerial split
Indonesia is looking for ways to stem a steady and the gross split system’s “regressive nature”
decline in oil and gas output that has been had proved unpopular with developers, espe-
exacerbated by the coronavirus (COVID-19) cially in light of this year’s oil price collapse.
pandemic. Research analyst Lionel Sumner said: “One
The country produced 713,300 bpd of crude benefit of cost recovery is the ability to offer some
in the first half, down from 755,000 bpd in Janu- reward for risks associated with frontier develop-
ary-June 2019. Natural gas output, meanwhile, ments. This is important, as it could encourage
tumbled from 6.67bn cubic feet (188.89mn cubic exploration to mitigate Indonesia’s declining
metres) per day to 5.61 bcf (158.88 mcm) per day. production.”™

Week 38 24•September•2020 www. NEWSBASE .com P7