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SKK Migas highlights production challenges

PERFORMANCE INDONESIA’S upstream regulator revealed
this week that the country is on track to miss the
government’s production target for this year and
that without serious changes the 2030 target is
also at risk.
The regulator’s deputy for operations, Julius
Wiratno, said lower-than-expected output in the
opening months of this year would drag on the
year’s final production average.
“We’re trying to fill the gap, it’s a bit tough.
Outlook [for year-end] total oil and gas is around
97-98%,” Wiratno told local media outlet Kontan
on July 12. According to his projections, national
production will amount to 1.66-168mn barrels
of oil equivalent per day, while the government’s
2021 target is 1.71mn boepd.
Wiratno’s figure is in line with a previous fore-
cast made by SKK Migas head Dwi Soetjipto that
the country’s oil and gas production might only
amount to 1.67mn boepd this year. Soetjipto said
this was due to unplanned shutdowns and drill-
ing delays in the first quarter.
Indonesia’s oil production averaged 670,1000
bpd in the first five months of the year, while gas Natuna, remain a challenge to develop. While
output amounted to 6.67bn cubic feet (188.89 Premier Oil discovered the field in 2000, the
mcm) per day, according to SKK Migas’ data. company relinquished the block in 2003 owing
Wiratno told Kontan that his agency was to the associated development challenges.
reviewing different production strategies to close While SKK Migas has said previously that it
the gap, elaborating the next day in an interview wants the government to make fiscal incentives
with Katadata that re-evaluating oil and gas more readily available to challenging projects,
plans of development (POD) was one of those the regulator is now pushing for a greater regu-
approaches. latory focus on overcoming the upstream indus-
try’s specific issues.
Project review pillar
Wiratno said on July 13 that there were “about Greater specificity
a dozen” projects under review in light of this SKK Migas’ head of legal, Didik Setyadi, praised
year’s international oil and gas price recovery. the government’s new Job Creation Law this
SKK Migas deputy for finance and monet- week, noting that it should simplify the acquisi-
isation Arief Setiawan Handoko, meanwhile, tion of permits and land approvals.
flagged up the Lengo gas field and the Ande Setyadi noted that this was an essential step
Ande Lumut oilfield as a couple of those devel- towards delivering on the government’s 2030
opments up for re-evaluation. production target of 1mn bpd of oil and 12bn
Handoko told Katadata that developer Kris- cubic feet (339.84 mcm) per day of gas.
Energy was evaluating Lengo, which lies in the Indeed, Handoko warned that with existing
Bulu block, with a focus on mitigating the field’s fields in decline, the country needed new incen-
carbon dioxide (CO2) and nitrogen (N2) level. tives if it hoped to boost upstream investment.
“The levels of Co2 and N2 are decent. The He added that if Indonesia adopted a business-
commercialisation of CO2 and N2 is still being as-usual approach then crude oil production was
considered,” the official said, adding that despite expected slide to just 281,000 bpd by 2030.
the high CO2 and N2 levels, the field was still With this in mind then, Setyadi called on
attractive because it was anticipated to produce the government to introduce more legislation
70 mmcf (1.98 mcm) per day. aimed specifically at improving the ease of doing
Handoko added that with the gas being business within the upstream. He said many
earmarked for Pertamina’s delayed greenfield broad-spectrum laws and regulations could not
Tuban refinery development, the field was likely be applied to the oil and gas sector, as the indus-
to come on stream some time in 2026. try was fundamentally different to other sectors.
He did not, however, mention the fact that “Things that have not been regulated and or
KrisEnergy had entered liquidation in early June, have not been sufficiently regulated in the Job
which raises the question over which operator Creation Law and its derivatives need to be stud-
will next lead Bulu’s development. ied, formulated and pushed together so that it is
The heavy oil reserves of the Ande Ande immediately regulated and determined to accel-
Lumut oilfield, which is located in the Northwest erate the achievement of these targets,” he said.™

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