Tuesday, July 16, 2024

Russian SOE’s incomplete divestment halts Tuna Block development

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Audina Nur

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The Upstream Oil and Gas Regulatory Task Force (SKK Migas) continues to push for the completion of the divestment of ZN Asia Ltd., a subsidiary of the Russian State-Owned Enterprise (SOE) Zarubezhneft, in the Tuna Block, located offshore East Natuna.

Hudi D. Suryodipuro, Head of Program and Communication Division at SKK Migas, said that the search for a replacement partner for ZN in the Tuna Block is ongoing through business-to-business (B2B) channels.

“We hope that they will be committed to the timeline as they had promised in April. We keep pushing,” Hudi said on Monday, May 6, 2024.

He cited that the ongoing pursuit of a replacement for ZN in the Tuna Block is to ensure certainty regarding the implementation of the block’s development plan (PoD). He highlighted that the development status of the Tuna Block remains stagnant due to the unresolved divestment process.

“We can’t proceed [with the Tuna Block’s status] until the divestment from ZN is settled,” he said.

Hudi emphasized that their priority is to ensure a smooth divestment process in the Tuna Block.

“Without a successful divestment, transactions cannot proceed, and the project cannot move forward,” he said.

SKK Migas has earlier aimed to finalize the divestment or replacement of ZN in the Tuna Block this year. Deputy Head of SKK Migas, Nanang Abdul Manaf, said that several companies have shown interest in replacing the Russian SOE. Nanang hoped that the divestment process could be concluded promptly to resume the stalled Tuna Block project due to sanctions from the UK and EU.

“There have been many [interested parties], but it takes time for the process, and once there’s a change in the participating rights holder from Zarubezhneft, we can start,” Nanang said in January this year.

The Tuna Block is estimated to have gas potential ranging from 100 to 150 million standard cubic feet per day (MMscfd). Investment in field development up to operational stages is estimated at US$3.07 billion or approximately Rp45.4 trillion. The investment breakdown for Tuna Field development includes non-sunk cost investments of US$1.05 billion, operation-related investments until economic limits of US$2.02 billion, and abandonment and site restoration (ASR) costs of US$147.59 million.

To stimulate the economy, the government provides several incentives assuming production until 2035, or the next 11 years. The government takes a gross revenue share of US$1.24 billion or approximately Rp18.4 trillion. Meanwhile, the contractor’s gross revenue is US$773 million or approximately Rp11.4 trillion, with cost recovery totaling US$3.315 billion. The planned gas production from the Tuna Field is expected to be exported to Vietnam by 2026.

Audina Nur

Journalist

 

Editor

 

Interview

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