The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) stated that the Sakakemang Block's plan of development (POD) will be approved in the near future.
Head of SKK Migas Dwi Soetjipto said that his party and Repsol had agreed on the gas price for the Sakakemang Project in line with the gas price policy set by the government. Not only that, but the gas project internal rate of return (IRR) has also been agreed upon.
Thus, the POD of Sakakemang Block has been discussed by Repsol with his party and submitted to the Ministry of Energy and Mineral Resources (ESDM).
"The current situation, the proposal [POD] is already in the Ministry of Energy and Mineral Resources. We hope it will be approved in the next 1-2 weeks, "he said.
The preparation of POD for Sakakemang Block was hampered by the proposed gas price of US $ 7 per million British thermal units (million British thermal unit / MMBTU) by the developer.
Meanwhile, on the other hand, the government has issued Decrees of the Minister of Energy and Mineral Resources, ESDM Minister Regulation number 89K / 2020 and 91K / 2020. This regulation limits the gas selling price to a maximum of US $ 6 per MMBTU for certain industries and power plants. This policy is valid for the next three years and can be re-evaluated.
"We have done a study, and we are also following government rules and regulations for domestic gas prices," said Dwi.
Regarding the POD being prepared, he explained, not all gas reserves in the Sakakemang Block will be developed. For Phase, I development, the gas reserves being developed are only around 0.5 trillion cubic feet (trillion cubic feet / TCF) of the total initial findings of 2 TCF. Meanwhile, the gas production plan is 85 million cubic feet per day (million standard cubic feet per day / MMscfd).
Previously, Repsol Group through its affiliate, Talisman Sakakemang BV, had signed a memorandum of understanding (MoU) with PT Perusahaan Gas Negara (PGN) Tbk for gas supply from the Sakakemang Block. This MoU has been in effect since July 12, 2019, and will be followed up with the signing of the Gas Sales Agreement (GSA) by the parties. Repsol SA discovered gas reserves in Sakakemang Block, South Sumatra with an estimated reserve of at least 2 trillion cubic feet through drilling the KBD-2X well at the beginning of last year.
In order to accelerate gas production, the development of this block will be carried out in stages with a reserve certification of 1 trillion cubic feet first. The government hopes that the Sakakemang Block can operate next year. However, in the 2019 second-quarter performance earning call, Repsol SA CEO and Executive Director Josu Jon Imaz San Miguel said he was optimistic that the Sakakemang Block production could be accelerated in 2022.
However, in a conference call for the performance of the first quarter of 2020, Imaz admitted that there were delays in the development of the Sakakemang Block. In the Sakakemang Block, Repsol holds a participating interest (PI) of 45% as well as the block operator. Meanwhile, its partners, Petronas, have a participating interest of 45% and MOECO 10%.
Investor Daily, Page-10, Saturday, Nov 21, 2020
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