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Government Prepares 50 Oil and Gas Blocks for Auction

To increase national oil production, the government has prepared 50 oil and gas blocks to be auctioned in the period 2021-2024. This is because the national demand for crude oil will increase to 1.49 million barrels per day (BPD) in 2030.

Secretary-General of the National Energy Council (DEN) Djoko Siswanto said that an auction of oil and gas blocks is necessary to increase national oil production. This is because once all fuel oil (BBM) refinery projects are completed, the refinery's raw material requirement for crude oil will increase to 1.4 million BPD.

"So to increase oil production, the government will auction off new working areas in 2021 to 2024," he said.

In 2021, there will be 10 oil and gas blocks which are a diversion from the planned auction in 2020, and 10 oil and gas blocks resulting from a joint study that was completed last year as well. Furthermore, 10 oil and gas blocks each will be offered in 2022-2024.

"In 2024, there are also 10 working areas that can be auctioned off to increase oil production as raw material for refineries," he said.

Referring to DEN's Grand National Energy Strategy (GSEN), a total of 50 oil and gas blocks are prepared for auction. In 2021, the oil and gas blocks prepared are the West Palmerah, Rangkas, Liman, Bose, Maratua II, Merangin III, Sekayu, North Kangean, Mamberamo, and Cendrawasih VIII blocks.

In addition, there are also blocks from the joint study, namely the Arakundo Block, Offshore Northwest Aceh, Offshore Southwest Aceh, South CPP, Bertak Pijar Puyuh, Sumbagsel, Serunai, Deep Water Bali, Bali Strait, and Karaeng. In 2022, the blocks to be prepared are the Barakuda Block, Peri Mahakam, North Ketapang, East Gebang, Ranau, East Muriah, Buton, Off Pulau Moa Selatan, Ogar, and West Papua III.

Next, the blocks that will be auctioned off in 2023 are the South Barito, North West Ganal, Budong-Budong, Malunda, East Bula, Semai IV, Kei, Papeda, Warim, and Asmar blocks. The last 10 blocks planned to be offered in 2024 are East Gebang, Baronang, Sokang, Kuningan, South Matindok, Enrekang, Bukat, Bulungan, Bone, and East Sokang.

However, for 2021, the Ministry of Energy and Mineral Resources (ESDM) has only confirmed the auction of 10 oil and gas blocks, which is a diversion from the planned auction in 2020.

ESDM Ministry's Upstream Oil and Gas Business Development Director Mustafid Gunawan said five oil and gas blocks would be offered through regular auctions, namely Merangi III, Sekayu, North Kangean, Cendrawasih Offshore, and Mamberamo Blocks. Furthermore, five other blocks were auctioned through direct bidding, namely West Palmerah, Liman, Rangkas, Bose, and Maratua II.

"This work area is expected to be offered in the first quarter to the first semester of 2021. This offer is the first implementation of the contract scheme flexibility Permen, "he said.

With the flexibility of the contract scheme, he hopes that the auction will remain in demand even though the Covid-19 pandemic is still ongoing.

Still Import

Djoko explained that the government has targeted oil production to be increased to 1 million BPD in 2030 after the refinery needs raw materials. This is because, without any effort, crude oil imports will be huge in the future. In fact, with a target of 1 as well as BPD alone, crude oil imports still have to be done.

"If the oil production target of 1 million BPD is successful, we still need to import 324 thousand BPD later in 2026-2027, the peak of operational refineries, both existing and built refineries," explained Djoko.

Based on GSEN DEN data, domestic crude oil demand will increase from 909 thousand BPD in 2020 to 993 thousand in 2025, and reach 1.49 million BPD in 2030. While domestic oil production is projected to increase from a range of 742 thousand in 2020 to 2025 to 1 million BPD in 2030. However, oil imports of 338 thousand BPD are estimated to be needed in 2030 and 441 thousand BPD in 2040.

In fact, the increase in domestic oil production has already taken into account additional projects from enhanced oil recovery / EOR and exploration. Oil production from EOR activities are targeted at 18 thousand BPD in 2025, up to 106 thousand BPD in 2030, and reaching 261 thousand BPD in 2040. 

    Meanwhile, additional production from exploration is 109 thousand BPD in 2030 and 220 thousand BPD in 2040. Additional production is also derived from the acquisition of 122 thousand BPD in 2025, 150 thousand in 2030, and 170 thousand in 2040.

Investor Daily, Page-10, Tuesday, Jan 26, 2021

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