Chevron Pacific Indonesia, US-based energy giant Chevron’s local subsidiary, has received approval from the country’s upstream oil and gas regulatory special task force SKKMigas to proceed with its Indonesia Deep Water Development (IDD) project in the Makassar Strait off Sulawesi.
Newly appointed SKKMigas head Rudi Rubiandini, formerly the country’s energy and mineral resources deputy minister, said on Friday he had signed the plan of development (POD) for the IDD project.
“We expect the IDD project to meet its investment commitment after the signing,” he said in Jakarta.
Chevron’s IDD project consists of three main fields, comprising the Bangka, Gendalo and Gehem fields. An estimated US$7 billion will be invested in the project.
Indonesia has high hopes of finding further hydrocarbon reserves in the deep waters of the country’s eastern region amid dwindling oil production.
However, several large oil and gas contractors such as US-based Hess and US’ ExxonMobil have already returned their block concessions in the Makassar Strait after deeming them to be unprofitable.
SKKMigas operations deputy Gde Pradnyana said that currently the IDD project had entered the tender process for the front-end engineering and design (FEED).
The final investment decision for the project would be determined as soon as the FEED process was complete, he added.
“We hope production at the IDD project will start in 2018, with the output from both Gendalo and Gehem projected to reach 1.1 billion cubic feet per day [bcfd] of natural gas,” Gde said.
Separately, Chevron Indonesia vice president for government policy and public affairs, Yanto Sianipar, said that the firm had already completed the tender process for FEED but declined to give details.
“We are currently working on settle several procedures and requirements before we can enter the final investment decision,” he said.
IDD is one of the several big natural gas projects that the government is relying on, others being the Jangkrik field, the Muara Bakau block as well as the Abadi field and Masela block.
SKKMigas’ Rudi said that, in addition to the IDD project, he had also signed the POD II for the Jangkrik field, which is operated by Italy-based ENI Indonesia, as well as the development of the fields in the Madura Strait offshore block, operated by Canada’s Husky Oil.
The Jangkrik field is expected to produce 145.5 million metric standard cubic feet per day (mmscfd) of natural gas, which will be processed into liquefied natural gas (LNG) at the Bontang plant in East Kalimantan, according to SKKMigas data.
At least 40 percent of the LNG produced from the Jangkrik field will be allocated to supply domestic LNG needs.
The MBH and MDA fields in the Madura Strait offshore block are expected to produce 120 mmscfd of natural gas all of which will supply gas needs in Java, Bali and Madura.
Investment in the Jangkrik field is estimated to be around $1.4 billion while the Madura project is calculated to be around $396.9 million.