Friday, June 14, 2024

SKK Migas to conclude Russian SOE divestment in Tuna Block by 2024      

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Audina Nur

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The Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) targets the divestment or replacement of Zarubezhneft in the Tuna Block, off the coast of East Natuna, to be decided this year. Deputy Head of SKK Migas, Nanang Abdul Manaf, said that several companies have shown interest in taking over the position of the Russian SOE.

Nanang hopes that the divestment process can be promptly finalized to resume the Tuna Block project, currently hindered by UK and EU sanctions. “Many have expressed interest on the project; it just needs a process, and once there is a change in the rights holder from Zarubezhneft, it can begin,” Nanang said at the Ministry of Energy and Mineral Resources in Jakarta on Wednesday.

As the operator of the Tuna Block, Harbour Energy projects the final investment decision (FID) for the Tuna Block development to be possibly determined in 2025. The relatively distant deadline from the approval of the initial plan of development (PoD) for the field, granted since December 23, 2022, is due to the impacts of EU and UK sanctions on their Russian partner, Zarubezhneft.

“There is indeed a time limit, hopefully, it will be completed this year regarding who will replace [them],” Nanang said. The gas-rich block located off the coast of East Natuna is operated by the British oil company Premier Oil Tuna BV (Harbour Energy Group) with a 50% participation right. Zarubezhneft, through its subsidiary ZN Asia Ltd., also holds a 50% participation right in the Tuna Block.

However, Harbour Energy CEO Linda Z Cook stated that the oil and gas portfolio in Indonesia, including the Tuna Block, is a priority investment for the company overseas. Harbour Energy, along with other partners, is currently conducting drilling for four advanced exploration wells in the Andaman Sea. This commitment highlights the significance of oil and gas assets in Indonesia for Harbour Energy. “We see progress in strategic investment opportunities outside the UK, such as in Indonesia,” said Harbour Energy CEO Linda Z Cook through a quoted disclosure on August 27, 2023.

The estimated potential gas reserves in the Tuna Block range from 100 to 150 million standard cubic feet per day (MMscfd). The investment for field development until the operational phase is estimated to reach USD 3.07 billion or about IDR 45.4 trillion. The estimated investment cost for the development of the Tuna Field includes investment (excluding sunk costs) of USD 1.05 billion, operating cost-related investments up to the economic limit of USD 2.02 billion, and abandonment and site restoration (ASR) costs of USD 147.59 million.

To boost the economy, the government provides several incentives with the assumption of production until 2035 or 11 years from now. The government takes a share of the gross revenue of USD 1.24 billion or approximately IDR 18.4 trillion. The contractor’s gross revenue is USD 773 million or approximately IDR 11.4 trillion, with cost recovery totaling USD 3.315 billion. The gas produced from the Tuna Field is planned to be exported to Vietnam by 2026.

Minister of Energy and Mineral Resources, Arifin Tasrif, has not specified the volume of gas to be exported. However, he revealed that the potential gas production in the Tuna Block is around 100-150 MMscfd. “The potential is there, 100-150 MMscfd. Our target is to export by 2026,” said Arifin during a media conversation at the Ministry of Energy and Mineral Resources in December 2022.

Audina Nur

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