The Indonesian government will be exercising caution during the re-auction of the D-Alpha gas field, which is part of the East Natuna Block located in Natuna Island, Riau.
The gas block is considered to be politically sensitive because of its location, which adjacent to the South China Sea. The South China Sea is lately known to be the source of geopolitical tension between China and the US and its allies in Southeast Asia.
“[The block] is extremely political because it is on the border [with South China Sea] and was formerly owned by an American company ExxonMobil. So, if [a company] from Russia, or China enters, will the US return,” said Director General of Oil and Gas of the Ministry of Energy and Mineral Resources Tutuka Ariadji on Wednesday (14/6).
Tutuka said that the Ministry of Energy and Mineral Resources will auction the D-Alpha gas filed through regular auction during the Indonesian Petroleum Association (IPA) Convex event on July 2023.
Attracting major companies
Tutuka said that a number of major companies have expressed their interest to operate the gas field. Tutuka, however, refused to provide further detail regarding the companies.
He asserted that the gas field requires a company with strong technical and financial capability to be able to effectively manage the CO2 reserves.
He added that the government will provide a work contract with interesting terms and condition for investors interested in the gas field.
Fifty years of waiting
The East Natuna Block is yet to be explored and exploited since it was discovered back in 1973.
The amount of gas reserves contained in the block is the largest in Indonesia with 4 times the capacity of the Masela Block. However, more than 70% CO2 concentration contained in the East Natuna Block made it difficult to manage and operate.
Based on the Ministry of Energy and Mineral Resources calculation, the East Natuna Block has 222 trillion cubic feet of gas potential. But, the high CO2 concentration contained in the block, which exceeds 70%, lowered the amount of gas that can be exploited to only 46 trillion cubic feet.
Change of management
Initially, the block was managed by ExxonMobil back in 1980. The government later terminated Exxon contract in 2007 because of lack of progress.
In 2008, the management of East Natuna Block was handed over to Pertamina. Exxon later join the block management through a consortium with Total and Petronas. Overtime, Petronas was replaced by companies from Thailand.
The consortium was later dismissed as ExxonMobil decided to abandon the East Natuna Block. Exxon argued that the block has no investment value.
Recently, the Ministry of Energy and Mineral Resources handed over the management of the East Natuna Block to PT Pertamina Hulu Energi’s subsidiary PT Pertamina East Natuna.
