The government through the Ministry of Energy and Mineral Resources (ESDM) is trying to maintain oil and gas production even though it is faced with various production challenges.
Dadan Kusdiana, Acting Director General of Oil and Gas at the ESDM ministry, said that currently there are huge opportunities for the country in its efforts to increase oil production.
First is an increase in petroleum production from offshore Buton Regency, Southeast Sulawesi, with a total of 1 million barrels of oil.
“The Ministry of Energy and Mineral Resources, through the Directorate General of Oil and Gas, has approved the implementation of the Buton Area Joint Study for Pertamina, Petrochina and Petronas,” Dadan said in Jakarta, on Tuesday, July 23, 2024.
Currently, efforts are being made to accelerate the completion of the joint study, so that the area can immediately make a direct offer and be developed.
Second is increasing the recovery factor, partnering with oil and gas companies from China.
Dadan said that upon the visit of ESDM Minister Arifin Tasrif to China, many Chinese oil and gas companies then came to Indonesia to try to increase the oil and gas recovery factor, such as CNPC, CNOOC, and Sinopec.
“For example, Sinopec, they fielded a specialist team. Of the 16 areas offered by Pertamina Hulu Energi (PHE), five areas have been selected, namely Rantau, Tanjung, Pamusian, Jirak and Zulu,” he said.
As for policy, a Decree of the Minister of Energy and Mineral Resources on Guidelines for Returning Uncultivated Parts of Potential Working Areas in the Context of Optimizing Oil and Gas Production was issued.
One of the provisions in this regulation is the obligation of Oil and Gas Cooperation Contract Contractors (KKKS) to immediately exploit parts of potential oil and gas Working Areas that are not being exploited or else return them.
“Regarding parts of the Oil and Gas Working Area (WK) that have potential but are idle, efforts need to be made, they cannot continue to be ignored. Currently it is being inventoried and optimization efforts will be taken immediately. There are at least 4 optimization efforts that can be carried out later,” Ariana Soemanto, Director of Upstream Oil and Gas Business Development, at the ESDM ministry, said.
Criteria for potential oil and gas WK sections that are idle include production fields that have not been produced for two consecutive years, or fields with a Plan of Development (POD) other than the 1st POD that have not been worked on for two consecutive years. KKKS was asked to immediately work on the potential WK.
Third, KKKS proposes potential WK parts to be managed further in accordance with statutory provisions.
Fourth, KKKS returns the portion of potential WK that is idle to the Ministry of Energy and Mineral Resources.
These four efforts are in accordance with the evaluation, plans and timelines recommended by the Upstream Oil and gas Regulatory Task Force (SKK Migas) or the Aceh Oil and Gas Management Agency (BPMA).
Meanwhile, a number of policies are believed to have made the oil and gas subsector more attractive in the last three years.
First, the policy of improving the auction and contract provisions for oil and gas blocks, which includes, among other things, contractor splits that can reach 50 percent, minimum signature bonuses, direct bidding auctions for oil and gas blocks without joint studies, cheaper bank guarantees, and gross split or cost recovery contract types.
Second, the exploration privilege policy. Contractors can move exploration activity commitments to open areas outside the blocks being worked on.
Third, the upstream oil and gas incentive policy Decree of the Minister of Energy and Mineral Resources No. 199/2021. This policy is to improve the economics of contractors in the middle of the road, through improving contractor splits, investment credits, accelerated depreciation calculations and improving parameters that affect other economics.
