Page 7 - AsianOil Week 08

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approvals process by centralising the exploration approval process.
The decision is something of an admission that switching models in 2016, with little to no industry input at the time, was a serious miscal- culation. That misstep has left investors uncer- tain about the country’s regulatory outlook, which has translated into too few new projects coming through the pipeline.
Harwood said the proposed changes to the country’s oil and gas laws could take years to have an effect on production levels and, even then, lingering investor concern about the coun- try’s political stability could undermine efforts of that front.
“I don’t know what’s going to happen in five years from now, or three years from now when the campaign for the next presidential elections kicks off again,” Harwood said. “If there’s a move again for a more nationalist sentiment, then all bets are off for international investors.”
Rystad’s Pandey noted that for Indone- sia’s combined oil and gas production to grow this year, then state-owned Pertamina would need to clear several hurdles. The consultancy noted that output from both the Mahakam and Rokan fields had declined
at higher rates since they were awarded to Pertamina in 2018. The state company took control of Mahakam from Total and Inpex in January 2018 and will assume Rokan’s oper- atorship from Chevron in 2021.
Harwood said: “Any increase from new pro- jects will be offset by declines at Chevron’s Rokan PSC, Pertamina’s Mahakam block, and Pertam- ina’s wider operations across Java and Sumatra.”
Pandey said that while the start of production from Eni’s Merakes field would boost Indonesia’s gas output, the field’s real impact would not be felt until at least 2021. He added: “With no major oil projects in the pipeline, oil production will continue to decline until Pertamina drills further on the Rokan block.”
Pertamina has been talking to Chevron since early 2019 about gaining early access to Rokan in order to begin drilling operations, though with little to show for it.
Pandey added: “Given this lackluster out- look, it is imperative for Indonesia’s oil and gas production that Pertamina reduces sanc- tioning hurdles that have long delayed many of its projects and implements advanced enhanced oil recovery (EOR) technology on its mature fields.”™
Zarubezhneft eyes Indonesian block
PROJECTS & COMPANIES
RUSSIA’S state-owned Zarubezhneft is report- edly eyeing an entry into Indonesia, having entered into talks with the UK’s Premier Oil on acquiring a stake in an offshore production-shar- ing contract (PSC) in the country.
Premier revealed last month it had signed a head of terms agreement with an unnamed investor to farm into the Tuna PSC. Under the deal, the investor would carry Premier for its share of the funding of a two-well appraisal cam- paign, according to the London-listed company. That investor is Zarubezhneft, the Russian firm confirmed to the Moscow-based Vedomosti newspaper on February 20.
Zarubezhneft already has exploration and production projects in Russia, Bosnia, Cuba and Vietnam. Its main focus is in Vietnam, where it is partnered with state-owned Petrovietnam. Vietsovpetro operates the country’s largest oil- field – Bach Ho – which is now nearing the end of its production cycle. The company’s other major project, the Kharyaga PSC in the Russian Arctic, is also mature, helping explain Zarubezh- neft’s drive to acquire new assets.
Premier was awarded operatorship and a 65% share of the Tuna block in 2007. Japan’s Mitsui Oil Exploration has a further 20% stake
in the project, while South Korea’s GS Energy owns 15%.
The partners drilled two wells in 2014, resulting in the Kuda Laut and Singa Laut oil and gas discoveries, assessed at 100mn barrels of oil equivalent (boe). In November 2017, Premier signed a memorandum with Indone- sian upstream regulator SKK Migas covering the future sale of gas from Tuna to Vietnam.
Zarubezhneft is also vying for new projects elsewhere, but has encountered setbacks. The company applied for blocks in licensing rounds held in Ecuador last year but was unsuccessful. It had also hoped to develop oil in Iran, capitalising on the close political connection between Mos- cow and Tehran. But it pulled out of two projects it was intending to work at just over a year ago, because of US sanctions.
Zarubezhneft is currently being considered for an offshore oil concession in Oman.
Zarubezhneft had 74.8mn tonnes (548mn barrels) of proven oil at the end of 2019, according to an appraisal by Hou- ston-based Miller and Lents. It produced 5.2mn tonnes (104,000 barrels per day, bpd) of oil in 2018 – the last year for which it has published output data.™
Week 08 26•February•2020 w w w. N E W S B A S E . c o m P7