Cooperation between countries to build standardization and business model for CCS industry

TANGERANG, May 15, 2024 – Indonesia is a strong candidate as a center of Carbon Capture Storage (CCS) development in the Asian region because it is recognized as having a large amount of CO2 storage capacity. However, to realize this, the government needs to collaborate with other countries that have experience in the carbon capture business.

Jodi Mahardi, Deputy for Coordination of Maritime Sovereignty and Energy at the Coordinating Ministry for Maritime Affairs and Investment (Marves), said Indonesia is blessed with a huge carbon storage capacity so the government dares to set a high target in its efforts to reduce emissions.

“We are realistic that one of the technologies that can decarbonize large amounts is to implement CCS,” said Jodi during Special Session 1 “Enablers for Cross Border CO2: G2G Bilateral Cooperations”, IPA Convex 2024. Wednesday (15/5).

Based on data from the Coordinating Ministry for Maritime Affairs and Investment (Marves), the value of CCS investment worldwide reached US$6.4 billion, US$1.2 billion of which came from Asia.

There are currently 15 CCS projects in the study and implementation stages such as in Sunda Asri, Tangguh, Saka Kemang, and others. In addition, CCS is also expected to create new businesses such as blue hydrogen and blue ammonia. Besides having storage with large capacity, Indonesia is also geographically very strategic which is close to emitters such as Singapore, South Korea and Japan. Indonesia is also one of the Asian countries that has favorable regulations to implement CCS.

Taichi Noda, Director General Business Strategy Department of the Japan Organization for Metals Energy Security, explained that there are three main points in the development of the CCS business, the first is regulation, project certainty and economics.

“The Japanese government only moved after there was regulatory certainty last year when the cooperation between Jogmec and Petronas was signed,” said Taichi.

Keith Tan, Deputy Secretary of Singapore’s Ministry of Trade and Industry, believes that intergovernmental cooperation to realize CO2 injection between countries is a must. In it, design standards and business models that can be used between countries must be developed.

“Indonesia and Malaysia, for example, are blessed with storage capacity. How can we work together, we study business models, G to G, prepare signals for commercial players. In Europe CCS projects are running with tax, incentives, we in Asia prepare standardization and targets. The government is preparing to ensure a framework for businesses to run CCS,” Keith explained.

Meanwhile, Hong Sukyung, Director of the Energy Technology Division, Ministry of Trade, Industry and Energy of South Korea, emphasized that not only the government but also state-owned and private enterprises must play a role in realizing CCS. Even for the long term, the government should initiate CCS in various educational institutions in order to research and develop more efficient CCS technology.

“The private sector and the government must work together. It is important to share study information. It is important to be able to introduce a curriculum on CCS in universities for the long-term development of the CCS industry,” Hong said.

Noor Arifin Muhammad, Director of Environmental Engineering at the Directorate General of Oil and Gas of the Ministry of Energy and Mineral Resources (ESDM), said that Indonesia is a new player in the implementation of CCS, therefore the government in drafting the rules must observe practices that have been carried out in other countries. The drafting process also involves experts from abroad.

“First we need a bilateral agreement between governments, then business details will be discussed at inter-company level,” Noor Arifin said during Plenary Session 3 “CCS as the Potential New Business Opportunity for Upstream Players and Supporting Economic Growth” at IPA Convex 2024 at ICE BSD, Tangerang, Wednesday (15/5).

Dan M Sparkes, VP Subsurface Asia Pacific and India BP Indonesia, said that CCS technology is available, but the different characteristics of each region affect the practice of CCS implementation. At Tangguh, for example, CCS planning was already in place even before gas was produced.

“CCS at Tangguh started to be developed even before gas was developed. But this is a matter of economics,” Dan said.

BP has an immediate opportunity to make profit by injecting more CO2 into the reservoir, which could help cover the high costs incurred by implementing CCS. “Enhanced gas recovery is fundamental for BP. Subsidies are not meant to solve long-term problems,” Dan said.

Belladonna Troxylon Maulianda, Executive Director of the Indonesia CCS Center, emphasized that although the challenges in implementing CCS are quite complex, the oil and gas industry remains at the forefront of those who can implement it.

“If not the upstream oil and gas industry, who else can implement CCS ? There are other industries such as petrochemicals and others but what about human capital, technology, it takes a long time if other industries do it,” Belladona explained.

In the discussion related to CCS/CCUS technology today, there were two CCS/CCUS development cooperation signings. These cooperation include:
– Pre-Liminary Agreement with ExxonMobil in one of the agenda of the 48th Indonesia Petroleum Association Convention and Exhibition (IPA CONVEX) at the Indonesia Convention Exhibition (ICE), BSD City. The Pre-Liminary Agreement was marked by a signing ceremony conducted directly by Senior Vice President Business Development ExxonMobil Indonesia, Egon van der Hoeven, with Director of Development & Production, Awang Lazuardi, on Wednesday (15/05). Also present to witness the signing were President Director of PT Pertamina (Persero), Nicke Widyawati, President of ExxonMobil Low Carbon Solutions Asia Pacific, Irtiza Sayyed, and President of ExxonMobil Indonesia, Carole Gall.
– Framework Agreement between PT Pertamina (Persero), Korean National Oil Corporation, and ExxonMobil Asia Pacific.

Through the strengthening of this collaboration, PHE and ExxonMobil will finalize and prepare a commercial model design for the development of a regional CCS/CCUS hub in the PT Pertamina Hulu Energi Offshore South East Sumatera (PHE OSES) Working Area with the potential to store domestic and international CO2 through the Asri Basin CCS Hub Project located in the PHE OSES Working Area.

“As part of the study is being carried out together, PHE and ExxonMobil (Esso Indonesia) will conduct drilling appraisal in order to collect data which will later become a reference for the development of the Asri Basin CCS Hub,” Awang explained.