The upward trend in global oil prices will boost exploration activity by oil and gas companies across Indonesia, but a number of challenges will hamper the up swing, according to the oil and gas regulator. Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) head Amien Sunaryadi said the effect of new exploration activity would only be seen after a few years. As of Monday, the Brent crude oil price reached US$ 76, almost double the lowest price of US$ 34 seen in the last eleven years.
“I am positive that that will help exploration activity, at least for seismic activity [one of the methods to find potential sources], but we must be patient, as it won’t produce results immediately” he said in Jakarta
Investment in exploration has declined by 58 percent from Rp 31.01 trillion in 2011 to only Rp 13 trillion in 2016 amid a continuous weakening of oil prices. Oversupply was the main suspect behind the low prices at the time, because the United States had been accelerating production soon after finding a new way to extract crude oil from rock to produce what was later called shale oil.
Given the upward trend in global crude prices, SKK Migas is hopeful that investment in the upstream oil and gas sector can reach $12.6 billion this year, $ 810 million of which is projected to go to exploration, with the remainder going to exploitation.
“Beside riding the wave of higher oil prices, contractors have also made firm commitments to set aside exploration budgets in their contracts,” he said, referring to the recent contract deals on oil and gas blocks on at least 20 blocks Linder the gross-split scheme.
One of those deals is that of Saka Energi Indonesia (SEI). an upstream unit of state-owned gas distributor Perusahaan Gas Negara (PGN), which on Monday signed a contract with the government on the Pekawai working area (WK) in East Kalimantan and on the West Yamdena WK in Maluku.
At these blocks, SEI, through its subsidiaries Saka Energi Sepinggan and Saka Energi Yamdena Barat, has committed to under-taking geological and geophysical (G&G) studies with a total investment value of $12.5 million.
“For Saka Energi Yamdena Barat, they also committed to conducting a 2D seismic survey covering 1,000 kilometers within the first three years of the contract period,” said Djoko Siswanto, oil and gas director general at the Energy and Mineral Resources Ministiy on Monday.
Through the two contracts, the government received $1 million in signature bonuses and $ 12,5 million in the blocks investment commitment tor the next three years. However, Jakarta Base Mining research group reforminer institute executive director Komaidi Notonegoro is not entirely on the same page with the government’s optimism on exploration.
Komaidi reasoned that there were still difiiculties in obtaining permits. while infrastructure for oil distribution was left wanting and uncertainty about tax policies hampered the industry.
“Our natural reseives are Currently located in the eastern areas of the country, hence the government might want to intensify infrastructure development in the region,” he said, adding that the reserves mainly lay in deep-sea areas, which required complex and coslly technology.
SEI president director Tumbur Parlindungan concurred that the government still had lots of homework to do to improve the ease of doing business in the industry. Yet, he said, he believed it was better to find the potential resources before asking for incentives. He further reasoned that, as an oil and gas company, conducting exploration was a non-negotiable activity in order to improve oil production.
“We [Indonesia] have a lot of unexplored potential resources that have yet to be found,” he said.
SEI produces an average 56,000 barrels of oil per day at its eight blocks, one of which is located in indonesia. When asked about the lack of infrastructure in the eastern region, Amien acknowledged that it had been affecting investor appetite for exploration, especially with regard to distribution.
the Jakarta Post, Page-13, Tuesday, May 15, 2018
No comments:
Post a Comment