The Ministry of Energy and Mineral Resources (ESDM) has approved the first Plan of Development (POD) for the Geng North Field, located in the North Ganal Working Area, indicating a significant step in the North Hub Development Project in the Makassar Strait, which is expected to boost national oil and gas production.
This field is a crucial component of the North Hub Development Project in the Makassar Strait, which also includes the Gehem Field in the Ganal Working Area and the Rapak Working Area.
Hudi D. Suryodipuro, Head of Program and Communication Division at the Upstream Oil and Gas Regulatory Task Force (SKK Migas), said that this approval is a strategic move to enhance the country’s oil and gas production capabilities.
“The approval process for the POD was completed swiftly, taking only 10 months since the giant discovery of Geng North in October 2023,” Hudi said on Friday, August 23, 2024.
The project is expected to attract a total investment of approximately US$17.5 billion (Rp270.4 trillion). This figure includes an investment cost of US$11.8 billion and operational costs amounting to US$5.6 billion.
Additionally, the total sunk cost for the North Ganal and Rapak Working Areas has been set at US$859 million, representing expenditures that cannot be recovered.
Beyond the initial investment, the approved POD is projected to generate substantial gross revenue, estimated at US$39.5 billion or around Rp610.4 trillion.
Of this total revenue, the government’s share is expected to be around US$12.9 billion, or 31.5 percent, while the contractors’ share will be approximately US$8.1 billion, or 19.7 percent. The cost recovery is projected to be US$18.336 billion, accounting for 44.4 percent of the gross revenue.
Hudi emphasized the significance of this approval for domestic investment, highlighting that the government’s minimum revenue from this project could reach Rp208 trillion.
“We hope that this development will stimulate the growth of industries within the country, particularly those requiring gas in East Kalimantan and North Kalimantan, ensuring that the available potential is fully utilized,” Hudi added.
The approval of the first POD for the Geng North Field, along with the Gehem Field in the Ganal Working Area and the Rapak Working Area, is anticipated to significantly bolster domestic investment enthusiasm and contribute to Indonesia’s energy sector.
