The Upstream Oil and Gas Regulatory Task Force (SKK Migas) is optimistic that the United Arab Emirates’ Mubadala Energy can expedite the development of gas potential in the South Andaman block, similar to ENI, which has recently secured approval for its Plan of Development (POD).
In the past year, Mubadala Energy has discovered significant gas reserves, including 6 trillion cubic feet (tcf) in the Layaran-1 well and 2 tcf in the Tangkulo-1 well.
Head of SKK Migas, Dwi Soetjipto, expressed hope that the POD for the South Andaman gas project could be approved by the end of this year.
“The work in South Andaman might be more complex because these gas reserves are in deep waters, and there is currently no infrastructure there,” Dwi said in a statement, as quoted by katadata.co.id on Thursday, August 29, 2024.
Despite the lack of existing infrastructure, Dwi mentioned that the South Andaman project might leverage the nearby Arun liquefied natural gas (LNG) plant in Aceh.
However, he noted that “the old plant might not be suitable for reactivation.”
Earlier, Dwi stated that Mubadala Energy is currently developing a POD scenario for the potential oil and gas in the area.
“The target is to complete this POD around October 2024,” Dwi said during a meeting in Jakarta on August 14, 2024.
Dwi explained that Mubadala is still calculating all aspects involved in the development plan for the South Andaman work area, such as the need for platforms to support production output.
“There will need to be an LNG plant built to transport the gas to Sumatra. We are also calculating the industrial needs,” he added.
To ensure the success of the South Andaman work area production, Dwi mentioned that SKK Migas is currently conducting a study to revitalize the Arun LNG plant, which will be used to process gas production from South Andaman.
Earlier this year, the government planned to construct a new LNG plant in Aceh as a measure to replace the aging facilities in the province.
“Not all equipment at the Arun plant can be used,” said Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Tutuka Ariadji, at his office in Jakarta on Thursday, January 11, 2024.
The plan to build a new plant emerged when Energy Minister Arifin Tasrif stated that the Arun LNG plant could not accommodate the gas potential in Aceh.
Historically, natural gas production in Northern Sumatra has been ongoing for decades, with the Arun field starting to flow gas in the early 1970s. At that time, American company Mobil Oil (later ExxonMobil Oil) conducted the drilling, with most of the gas production exported to Japan and South Korea.
The remainder was used for the Iskandar Muda fertilizer plant and power generation. Over the years, the Arun LNG plant has fallen into disuse due to a lack of gas supply.
Good news arrived in 2022 when the government announced a giant gas discovery in northern Aceh, including the Andaman block.
Regarding the LNG plant construction plan, Tutuka mentioned that it could be undertaken by any party.
“It could be Mubadala, it could be anyone,” he said.
