Indonesia Says Chevron Gas Project Set Back by Up to 2 Years

Reuters

JAKARTA, Oct 28 (Reuters) - The target for full operation of the Indonesia Deepwater Development (IDD) gas project has been delayed by up to two years to around 2020, a senior official said, reducing the country's prospects of remaining a major gas exporter.

The delay to the $12 billion ultra-deepwater IDD project comes as Indonesia scales back exports of liquefied natural gas and looks to future imports to help meet rapidly growing domestic demand. State energy firm Pertamina has signed deals to secure imports of LNG from the United States from 2018.

Chevron Corp said earlier this month it had made a final investment decision to go ahead with the first stage of the IDD project - the Bangka field - but delayed a decision on the second stage - the Gendalo and Gehem fields - while it reassessed its development plans.

The project includes the Bangka, Gendalo, Gehem, Gandang and Maha fields off eastern Borneo.

Upstream oil and gas regulator (SKKMigas) is currently working with Chevron to review new reserves estimates and development plans for the Gendalo and Gehem fields, SKKMigas Chairman Johannes Widjonarko told reporters. "Clearly the reserves will change."

The adjustments could delay the project by "up to two years, if permits are processed quickly", Widjonarko said, from an earlier target to start production in 2018.

Wells are currently being drilled at the Bangka field, which is scheduled to start producing in 2016, Widjonarko said.

Newly inaugurated Energy Minister Sudirman Said warned on Monday that Indonesia could enter a period of crisis unless energy issues were addressed seriously.

The performance of Indonesia's new administration will be judged on how quickly it can make decisions on large oil and gas projects including IDD, said Pri Agung Rakhmanto, a member of a team that advised President Joko Widodo on energy matters prior to his inauguration.

"These need immediate decisions," Rakhmanto said, referring to delays at IDD as well as the Masela Abadi project operated by Inpex and the Jangkrik field operated by Eni.

Chevron expects to produce a maximum of 1.1 billion cubic feet of natural gas and 47,000 barrels of condensate per day from the two fields in the second stage of IDD.

The Gendalo and Gehem field developments will involve two separate production hubs, each with its own floating production unit, subsea drill centres, gas and condensate pipelines, and onshore receiving facility.

Gas from IDD will be shipped via pipeline to Indonesia's existing Bontang LNG plant for liquefaction.

(Reporting by Wilda Asmarini; Writing by Fergus Jensen; editing by Jane Baird)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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