The Indonesian oil and gas industry has received good news again from the discovery of large volumes of oil and gas reserves by the giant company from Italy, ENI. It is hoped that this positive sentiment can increase the attractiveness of the oil and gas sector.
The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) revealed that ENI had succeeded in finding natural gas reserves in the North Ganal Working Area, East Kalimantan-Indonesia, with an initial gas estimate of 5 Trillion Cubic Feet (Tcf).
With an initial estimate of discovered resources of around 609 million barrels of oil equivalent, the report makes the discovery at the Geng North-1 well one of the world's top three exploration discoveries this year.
Head of SKK Migas Dwi Soetjipto said that this finding would be one of the giant discoveries that would significantly increase gas reserves to support a sustainable increase in Indonesia's oil and gas production in order to achieve the oil production target of 1 million Barrels of Oil Per Day (BOPD), and gas of 12 billion cubic feet per day (BSCFD) in 2030.
It is believed that this giant discovery can encourage more massive exploration investment in the future, considering that Indonesia's oil and gas potential is very promising because there are still 68 basins out of a total of 128 oil source basins that have not been drilled.
Dwi Soetjipto said we hope that the discovery of gas reserves in North Ganal by one of the International Oil Companies [IOC] will encourage more other IOCs to enter Indonesia.
SKK Migas immediately carried out intensive coordination with ENI to formulate the next stages so that this giant discovery could be immediately monetized.
The Indonesian oil and gas authority will encourage the discovery of gas reserves to reach the production stage, so that it can increase supply to support development, including gas downstream which is currently being advocated by the government.
"This is also supported by the gas infrastructure that is already available in East Kalimantan, so it is hoped that it can be developed quickly and efficiently," said Dwi Seotjipto.
ENI said that the discovery of significant amounts of natural gas reserves came from the Geng North-1 exploration well in the North Ganal Block, around 85 kilometers (km) off the coast of East Kalimantan.
Based on Eni's official statement, initial estimates show that the total structure discovered is 5 TCF of gas with a condensate content of around 400 Mbbls. The data obtained will allow for faster development studies.
The Geng North-1 well was drilled to a depth of 5,025 meters in a water depth of 1,947 meters, passing through a gas column approximately 50 meters thick in a Miacene sandstone reservoir with good petrophysical properties.
The well production test (DST) has been successfully carried out for a comprehensive assessment of the gas discovery. Although limited by testing facilities, this study allows for estimates of the well capacity of up to 80-100 MMscfd and approximately 5-6 kbbls of condensate.
It is also believed that the findings will contribute significantly to the formation of a new gas production hub in the northern part of the Kutai Basin, East Kalimantan.
Apart from that, these findings will be connected to the Liquefied Natural Gas/LNG facility in Bontang, East Kalimantan-Indonesia. It is estimated that apart from Geng North, more than 5 Tcf of gas is located in undeveloped fields within the oil and gas block. The potential for significant multi-Tcf exploration is being refined through ongoing studies.
The Geng North discovery is close to the Indonesia Deepwater Development (IDD) area which includes several old discoveries that are not immediately developed in the Rapak and Ganal Blocks, where Eni has just announced the acquisition of Chevron shares, increasing ENI's participating shares, and acquiring Chevron operator ownership.
Eni also promised to seek to merge the two oil and gas working areas for more optimal gas development. the acquisition also provides an opportunity to accelerate the development of the Gendalo and Gandang gas projects with gas reserves of around 2 TCF through the Jangkrik Gas Field facilities operated by Eni.
ACCELERATION
Meanwhile, the Ministry of Energy and Mineral Resources (ESDM) is targeting the discovery of giant gas reserves from the Geng Nordi-1 exploration well, North Ganal Block, ENI hopes to produce production within the next 2 years.
The Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that his party would facilitate the accelerated approval of the Plan of Development (PoD) plan for the block. The hope is that the timeframe for exploiting preparations can be accelerated.
“We will facilitate this so that this happens quickly. "We are targeting that in the next 2 years, we will be able to get first gas," said Tutuka Ariadji.
Even so, Tutuka reminded Eni of a number of homework that had to be completed when developing the gas reserves discovery, such as the vast expanse and the very challenging depth of the oil and gas reserves.
"It's a very large oil expanse, the thickness is okay and satisfying, but it's very wide," he said.
The lengthy licensing process in the upstream oil and gas sector has become a public highlight to the point that the government is pushing for the issuance of special regulations that regulate the simplification and acceleration of basic requirements and licensing for upstream oil and gas activities in order to increase competitiveness and certainty of investment for Cooperation Contract Contractors (CCC/KKKS) in Indonesia.
ReforMiner Institute Founder & Advisor Pri Agung Rakhmanto said that several times the discussion of the technology and economics of a proposed PoD was too detailed and very technical, making the process take a long time.
This has not been supplemented by finalizing discussions regarding the PoD's decision itself, so KKKS has to wait longer to get certainty.
In investment, there is a time value of money. The longer the time, the relative decrease in economic value. This also adds to the uncertainty factor if there is no decision soon.
Pri Agung Rakhmanto also suggested that the government issue a special regulation that regulates the maximum time span for the PoD approval process. The hope is that the process of discussing and approving oil and gas field development plans in Indonesia can be faster.
Pri Agung also sees the same thing happening in the upstream oil and gas procurement process, where technical verification and checking processes before approval related to procurement take a very, very long time. As a result, KKKS feels that investment procedures in Indonesia are still too long and increase costs.
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