Indonesia, which is seeking to significantly boost oil and gas production this decade, is today launching its first 2022 bid round. Six blocks are up for grabs, offering a range of exploitation, near-field and frontier high-impact opportunities.
“Great strides are being made to improve the attractiveness of Indonesia’s oil and gas potential, and the launch comes hot on the heels of Harbour Energy, bp and Mubadala Petroleum’s successful Timpan-1 exploration well,” said Andrew Harwood, Asia Pacific research director at Wood Mackenzie.
On offer via the regular tender process are the Bengara I, South Makassar and Arakundo blocks while the Bawean, Offshore North West Aceh and Offshore South West Aceh blocks are available via direct offer.
“The Arakundo block off North Sumatra will likely garner the most attention given its proven petroleum system, proximity to market, and the reflected glory of the recent Timpan-1 discovery offshore North Sumatra. However, previous discoveries in this postcode have struggled with high CO2 levels making commercialisation difficult,” Harwood told Energy Voice.
“All of the blocks are considered moderate to very high risk, which means they benefit from the most attractive profit splits under Indonesia’s revamped fiscal offering,” he added.
But with bid rounds also underway in Malaysia, Thailand and offshore China, Indonesia’s latest exploration offering could be up against some stiff competition.
Indonesia wants attract new investment in exploration and production as the government is maintaining its ambitious goal of boosting liquids (oil and condensate) production to 1 million barrels per day and gas output to 12 billion cubic feet per day by 2030. Indeed, Jakarta has estimated that $187 billion needs to be invested in its upstream sector to meet its lofty target.
“Indonesia’s need for oil and gas investment is clear, given its recent failure to meet its mid-year production targets. The launch of this latest bid round highlights the huge efforts being made by Indonesia’s authorities to attract explorers. But much more activity, not to mention material exploration success, will be required to put Indonesia on the map again as an exploration hotspot – more drastic regulatory changes may yet be needed,” Harwood told Energy Voice.
Indonesia’s oil and gas production in the first half of this year stood at 1.57 million barrels of oil equivalent per day (boepd), around 90% of the government’s 1.74 million boepd target for 2022, according to data from upstream regulator SKK Migas. The regulator recorded 616,600 barrels of oil per day (bopd) as of June 30, or 88% of the 703,000 bopd production target, while gas production totalled 5,326 million cubic feet per day (mmcfd), 92% of the 5,800 mmcfd target. Meanwhile, investments over the same period hit $4.8 billion, just 36% of this year’s $13.2 billion target.