Friday, February 23, 2024

SKK Migas reports progress in tuna block management transition

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The Indonesian Upstream Oil and Gas Regulatory Task Force (SKK Migas) provides the latest update on the management transition of the Tuna Block in the North Natuna Sea, with foreign companies showing intterest in the process.

Dwi Soetjipto, Head of SKK Migas, said the replacement of the Tuna Block operator has entered the data opening process. He cited that several global or foreign companies, around 14, have expressed interest in and submitted offers for the Tuna Block.

“There are 14 companies, if I’m not mistaken, from global or foreign companies,” said Dwi, on Monday, February 5, 2024.

He said further that the decision on the new management of the Tuna Block, which was previously held by the Russian company Zarubezhneft, will be determined in the next two months.

“They [interested companies] have to submit it in March 2024, and then in April, the decision on the one that will replace Zarubezhneft will be made,” he said.

Dwi noted that the number of operators for the Tuna Block is yet to be confirmed. “Whether one or two companies, we don’t know yet,” he said.

Zarubezhneft is a Russian oil company that played the role as one of the operators of the Tuna Block, holding 50 percent participation rights alongside Premier Oil Tuna BV.

Regarding the opening of Tuna Block data, permission was obtained through the subsidiary ZN Asia Limited. Zarubezhneft had received approval for data opening from the Investment Coordinating Board (BKPM) as the initial step to release its 50 percent participation rights in the Tuna Block.

The departure of Zarubezhneft from the Tuna Block has the potential to impede the development plans for the area. This is due to the European Union sanctions and the UK government’s measures against Russia, which Zarubezhneft felt when developing the field.

In an early 2023 meeting with SKK Migas, Harbour Energy − the parent company of Premier Oil Tuna BV − revealed that the plan faced restrictions from the European Union and the UK government. These sanctions were in response to Russia’s invasion of Ukraine since early last year.

Amid efforts to find new partners, the Ministry of Energy and Mineral Resources continues to strive to prevent the Tuna Block development project from stalling.

Minister of Energy and Mineral Resources Arifin Tasrif stated that this US$ 1.05 billion project (IDR 16 trillion), plays a crucial role in gas production, with plans to export to Vietnam by 2026.

“This project will continue. If we are looking for new partnerships, we will encourage that because the progress is good,” said Arifin in March 2023.

The potential gas production from the Tuna Block is estimated between 100 to 150 million standard cubic feet per day (MMscfd). With the project’s implementation, the government will receive gross revenue of US$ 1.2 billion, equivalent to more than IDR 18.4 trillion.

The contractor’s gross revenue is US$ 773 million, equivalent to more than IDR 11.4 trillion, with cost recovery reaching US$ 3.3 billion.

“This project will continue, why would we stop if the progress is good?” said Arifin.

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