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CHEVRON Deep Sea Gas Project constrained Oil Prices

 

Blogger Agus Purnomo in SKK Migas

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) and Natural Gas reported that Chevron Indonesia Company has not yet submitted a revision of the plan for the development of the deep-sea gas project or Indonesia Deepwater Development stage 2. 

    SKK Migas spokesperson Taslim Z. Yunus said the continuation of the project located in the field Gendalo and Gehem, in the Makassar Strait, were detained because oil prices were still low.

"The price of oil is still low, the economy is still marginal," said Taslim.

Chevron has submitted Plan of Development (POD) documents since the end of 2015. However, SKK Migas returned the files because they were incomplete. This return automatically extends the project discussion process.

Deputy for Planning Control of SKK Migas Gunawan Sutadiwiria said the revised POD for deep-sea gas contains changes in production schedules and project investment value. This is because the deep-sea gas project document was prepared with an oil price assumption of US $ 100 per barrel. Meanwhile, currently, the world oil price on the Brent market is the US $ 53.11 per barrel.

The price of oil traded on the West Texas Intermediate market is not much different, namely US $ 50.28 per barrel. "Because they are still using the old oil price reference, US $ 100 per barrel," he said.

Gunawan added that the production schedule for the Gendalo-Gehem Field was also revised in 2023. At the current POD, the project's production target is 2020. To improve the project's economy, Chevron also asked for government incentives in the form of investment credit above 100 percent. However, the government rejected the proposal.

the IDD project Chevron

This is because investment credit incentives never exceed 50 percent. Moreover, the investment value of the IDD project is estimated at less than US $ 10 billion. Vice President of Public Affairs Chevron Indonesia Yanto Sianipar did not reply to confirmation.

Based on records from the Ministry of Energy, the production of the Gendalo and Gehem fields is estimated to reach 1.1 billion cubic feet of natural gas and 47 thousand barrels of condensate per day. Meanwhile, the IDD Phase I project in the Bangka field has been in production since the end of August 2016. 

    Its production capacity reaches 110 million standard cubic feet (mmscfd) of gas and 4,000 barrels of condensate per day. In the Bangka project, Chevron owns 62 percent of the shares. The remaining 20 percent is owned by ENI and 18 percent belongs to Tip-Top Oil and Gas Co.

Vice President Jusuf Kalla

Chevron has met with Vice President Jusuf Kalla at the Vice President's office. The company stated that it is still committed to doing business in Indonesia even though it has sold its assets in the East Kalimantan oil and gas block and geothermal facilities in the Drajat and Salak Fields, West Java. Yanto said Chevron continues to strive to increase production and reduce operating costs.

"We want to continue our good cooperation with the government," he said.

Koran Tempo, Page-17, Friday, March 10, 2017

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