T

he government is expecting to finalize decisions on its plans to develop a multi-billion dollar project, Indonesia Deepwater Development (IDD), by the middle of next year.

Widhyawan Prawiraatmadja, the head of the Energy and Mineral Resources Ministry'€™s performance controlling unit '€” whose tasks include accelerating stalled projects '€” said the project would be necessary for the country'€™s income and gas supply security for the country in the near future.

'€œThe target is an FID [final investment decision] by the middle of next year. However, to reach that stage, SKKMigas has to evaluate all matters regarding the project soon,'€ Widhyawan said, referring SKKMigas to the Upstream Oil and Gas Regulatory Task Force.

'€œWe want it quicker as we are currently in need of gas, revenue and projects, so that the economic activities can keep moving,'€ he added.

Reaching the FID stage is necessary as it marks the start of a project. The project'€™s plan of development (POD) has been approved by the government in 2008. The project, which is developed by Chevron, will be conducted through four production sharing contracts, namely Ganal, Rapak, Makassar Strait and Muara Bakau.

Initially, Chevron has planned to reach the FID stage by the end of the year so that it would be able to complete all development by 2018. However, in a recent development, the company submitted a request to revise its calculation of the project given new discoveries of gas reserves.

Under an initial plan, the project was estimated to cost US$7 billion. However, it was later estimated that the project would cost around $12 billion or more given the reserves recently discovered.

'€œChevron has not submitted it [the new POD],'€ the Energy and Mineral Resources Ministry'€™s acting director general for oil and gas, Naryanto Wagimin, said in a text message on Monday.

Apart from the higher estimation of investment, Chevron will also need to ensure the economical period of four working areas covered by the IDD project.

Out of the four working areas, the contract of Makassar Strait will expire in 2020, which is eight years sooner than the others that will due in 2028. Widhyawan said the economical period of the project could be different and the ministry was now looking for recommendations from SKKMigas.

'€œWe will see whether the calculation is correct,'€ he said.

SKKMigas spokesman Rudianto Rimbono said Chevron was expected to submit its new plan by the end of this December.

The deepwater project is deemed necessary for the country, which is estimated to see increasing demand of the commodity. Delays in a number of gas field development projects will likely make the country, which was once the world'€™s largest liquefied natural gas (LNG) producer, become a gas importer within the next few years.

The country is estimated to have 104 trillion standard cubic feet (tscf) in proven and 48 tscf in potential gas reserves, making it the 13th largest owner of proven natural gas reserves in the world and the second-biggest in the Asia-Pacific region after China, according to the International Energy Agency.

Most of the gas production is sent abroad in long-term contracts while domestic absorption is hampered by poor infrastructure facilities.