Indonesia's SKK Migas Approves 18 Oil, Gas Projects in January-April

Indonesia approved the development plans for 18 oil and gas projects in the country in the first four months of 2016, local upstream regulator the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said Monday in a press release.

"Total investment is estimated at (around) $1.46 billion or approximately IDR 19.5 trillion," SKK Migas Head of Public Relations for Oil & Gas Taslim Z. Uunus said in Jakarta Sunday.

According to SKK Migas, the petroleum projects being developed comprised plan of development (PoD), plan for further development (PoFD), and put on production (PoP). Together, these fields will be develop to commence production between 2016 to 2020. Sixteen of these fields are located in the western part of in Indonesia, while the other 2 fields are located in the country's eastern region.

Given limited upstream work done in Indonesia's eastern region, "the potential in the East is huge," Taslim said.

SKK Migas estimated that cumulative oil and gas production from the 18 development projects amounted to 45 million barrels, while the natural gas fields hold as much as 271 billion cubic feet (Bcf), providing the state with a projected revenue of around $3.015 billion (IDR 39.2 trillion).

"That number does not include multiplier effects on the economy that arise from the s projects," Taslim said.

SKK Migas said separately April 27 that Indonesia's Ministry of Energy and Mineral Resources (MEMR) is exploring ways of incentivizing domestic oil and gas exploration -- which has been hit by low oil prices -- to promote the discovery of new hydrocarbon reserves.

“We must take action. If the exploration is done with business-as-usual scenario, the production will continue to fall,” MEMR's Director General for Oil and Gas IGN Wiratmaja Puja said.

One of the incentives under consideration is to extend the period for oil and gas exploration to 10 years, up from the previous exploration period that was limited to 6 years.

“Let’s say the total contract is 30 years with the exploration of 6 up to 10 years. For example, due to poor oil price in 5 years, we extend the exploration by 5 years, becoming 15 years. Thus, the contract period also increases 5 years,” Wiratmaja explained, adding that exploration period extension is much preferred compared to contract termination given that contractors can continue their activities.

“Instead of terminating the period and they can’t do anything, it is much better that we give them time so they can dig deeper,” he said.

SKK Migas Chairman Amien Sunaryadi commented that the best time to increase exploration is during period of low oil prices when services cost are low. “It is better to invest when the price is low so later the revenue can be obtained when the price has increased,” Amien said.

Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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