Indonesia, Iran to Sign MOU Soon for Development of Iranian Oil, Gas Blocks

Fellow OPEC members Iran and Indonesia planned to sign a memorandum of understanding (MOU) shortly for the Southeast Asian country to assist in the development of Iranian oil and gas field blocks, according to a senior executive of Indonesian national oil company PT Pertamina, as cited in Iran's Far News Agency Saturday.

"There are two to four blocks that will be evaluated based on the initial study; of the four, there are two blocks that will be our priority," Pertamina's Upstream Director Syamsu Alam said.

Pertamina is looking into ways of increasing crude oil production at each of the two blocks by 30,000 barrels per day as part of its upstream development plans. The Indonesian state-owned company has budgeted $5.31 billion in capital expenditure this year, with 72 percent or $3.8 billion allocated for the upstream sector, Pertamina President Director Dwi Soetjipto said, as quoted Jan. 16 in Indonesian daily The Jakarta Post.

The company already produces petroleum overseas, operating three foreign oil and gas producing blocks in Iraq, Algeria and Malaysia. Pertamina intends to spend up to $2 billion on upstream mergers and acquisitions this year. Iraq's West Qurna 1 block has been reported to have produced around 33,500 barrels of oil per day (bopd) in 2015.

The Jakarta Post reported July 1 that Pertamina's proposed MOU with Iran, through the National Iranian Oil Co. (NIOC), would enable the firm to import crude oil from the two undisclosed blocks in Iran for processing at its domestic refineries in Cilacap in Central Java.

Last month, the country's Parliamentary  Speaker Zulkifli Hassan met the Iranian Ambassador to Indonesia Valiollah Mohammadi Nasrabadi and called for an expansion of bilateral cooperation.

"Jakarta and Tehran should work for broadening of their bilateral ties," Hassan said, Fars reported.

Indonesia is dependent on crude oil imports to meet a supply shortfall. OPEC's only Asian member consumed 1,628,000 bopd in 2015, nearly half of the country's productionof 825,000 bopd, according to the 2016 edition of BP Statistical Review of World Energy.

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