Keeping the Momentum, Government Encouraged to Continue Accelerating Oil and Gas Field Development

TANGERANG, May 15, 2024 – The development of potential oil and gas reserves in Indonesia needs acceleration. The government plays a key role in this acceleration through various policies as well as fiscal and non-fiscal support.

Roberto Daniele, Managing Director of ENI Indonesia, explained that there has been a lot of time wasted between the discovery period and the process of preparing the Final Investment Decision (FID). The Indonesian government has taken the initiative to improve this.

Roberto emphasized that collaboration between PSC Contractor and the government is a determining factor in accelerating the development of oil and gas fields. ENI successfully accelerated the monetization process of the gas discovery in Geng North with this good collaboration.

“A lot of time is spent between discovery and FID, overall we have to simplify the administration. We have been working on this for the past few months, this cannot be done without government support. After 4-5 months of discovery we are ready to discuss the Geng North POD,” Roberto said in Plenary Session 5 “Acceleration and Alignment on Field Development Projects to Address Energy Security” during the side lines of IPA Convex 2024, at ICE BSD, Tangerang, Wednesday (15/5).

With the government’s initiative, businesses will be more active in searching for oil and gas reserves. According to Roberto, ENI is ready to continue the exploration process. “Synergy is the key to building efficiency in every line of the oil and gas industry,” Roberto said.

Geng North is part of Indonesia’s deep water oil and gas field development, or Indonesia Deep Water Development (IDD). The potential reserves in this block reach 2.67 TCF with gas in place of 5.8 TCF. This is the largest gas discovery in recent years.

Awang Lazuardi, Director of Development and Production at Pertamina Hulu Energi (PHE), said that one of the government’s visible roles is to designate several oil and gas projects as National Strategic Projects (PSN). “There are several projects included in the PSN, the scale of the project has a direct impact on the economy,” he said.

Current projects that are designated as PSN include the IDD Project, Tangguh Train 3, and the Masela Abadi Project. According to him, as a PSN there are several benefits that can be obtained so that there is an acceleration of projects such as being in the spotlight. “There is more energy to make energy on target. Evaluation and government support to be continuously monitored,” Awang explained.

Rosa Permata Sari, Director of Strategy and Business Development of PT PGN Tbk, invited gas producers to collaborate with PGN. Currently, PGN controls most of the gas market in Indonesia. “We can connect supply and demand through qualified infrastructure. We are able to build markets and infrastructure safely,” Rosa explained.

PGN, continued Rosa, will maintain the sustainability of the gas business by continuing to develop infrastructure. She cited the development of LNG facilities in Arun, Aceh, continuing the construction of transmission pipelines, city gas networks.

“We are not only building western Indonesia, but also how to utilize eastern Indonesia. We are developing an LNG terminal in Lamong, for Sulawesi Papua, not only to meet electricity needs but also industry and petrochemicals. We are ready to collaborate with gas producers,” Rosa explained.

Benny Lubiantara, Deputy for Exploration Development and Management of Working Areas of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), admitted that the competitiveness of Indonesia’s oil and gas industry had indeed declined a few years ago.

For this reason, the government has made several improvements in terms of regulations and bureaucracy hence currently business actors have experienced varied business facilities.

Based on SKK Migas data, since 2020 the number of discoveries or findings of oil and gas reserves has continued to grow. Starting from 10 findings in 2020, then 13 findings in 2021. It increased to 21 findings in 2022 and there were 19 findings in 2023. Among these discoveries it is even the largest not only in Indonesia but also in the world such as in Andaman and Gang North.

Some cases show how the government’s initiative has paid off with more investment leading to the discovery of reserves that can be immediately monetized. “For the Hidayah Working Area, we are targeting 5-6 years from discovery to production. This is fast compared to the global average. Geng North may take four years. Layaran will also be fast tracked,” said Benny.