T

he government hopes to start producing oil from the East Natuna block in the next three years, while a consortium continues to study potential gas production from the field, which boasts the largest gas reserve in Asia.

The government has continuously expressed its desire to develop the oil and gas field located in the Natuna Islands, Riau Islands province as it has proven reserves of 46 trillion cubic feet (tcf). However, studies have shown that the high concentration of carbon dioxide (CO2) in the oil and gas field has proven difficult for gas production plans to move forward.

In the meantime, an official from the Energy and Minerals Resources Ministry said on Monday that the government had asked a consortium consisting of state-owned oil and gas company Pertamina, US-based ExxonMobil and Thailand’s PTT Exploration and Production (PTT EP) to consider wells to produce oil while they continue their two-year study of the gas in the same area.

“We have estimated that oil production can start after three years of development. It is small-scale production but this can be one of our strategies to start expediting development,” said the ministry’s director general for oil and gas, IGN Wiratmaja Puja.

There is an estimated oil reserve of 46 million stock tank barrels (mmstb) under the gas reservoir, and it will be able to produce approximately 7,000 to 15,000 barrels of oil per day (bopd), he added.

The government is optimistic that it could sign the East Natuna block oil and gas cooperation contract by the end of year, making it possible for the block to start producing oil in 2019.

Despite the small oil reserves, East Natuna’s gas production is slated to be the largest in the region, beating out the current largest gas field in the country, the mature Mahakam block.

However, any gas production development in East Natuna will require advanced technologies and huge investment to remove CO2 from the block. The block, previously known as D-Alpha, reports a high CO2 level of 72 percent, the highest exploitation field CO2 level in the world.

Earlier reports have cited figures between US$20 billion to $40 billion required for the block.

Despite the government’s optimism, Pertamina’s upstream director, Syamsu Alam, said that it was impossible for a production-sharing contract (PSC) to be signed for East Natuna by the end of this year.

“Of course we want there to be activity as soon as possible, and there is a possibility we can integrate [East Natuna] with other existing blocks in the region for oil production. However, there needs to be a PSC first because before then the block isn’t ours yet,” he said.

The Natuna Islands is home to seven oil and gas exploitation fields and 10 exploration fields, with a total production of 48.21 million standard cubic feet of gas per day (mmscfd) and 25,447 bopd. However, several exploitation fields in West Natuna have ceased production due to depleted reserves.

Oil and gas director general Wiratmaja said that one of the oil and gas fields, the Emas Putih block, will be offered in next semester’s tender. “It will be put on auction in the second semester. We are preparing it right now,” he said.

The Natuna Islands and its surrounding waters are located close to the nine-dash line, a controversial demarcation line unilaterally declared by China as the basis of its claim over most of the resource-rich South China Sea. The demarcation line has recently been denounced by the Permanent Court of Arbitration as it violates maritime law.

Although Indonesia is not a claimant state in any territorial dispute in the South China Sea, Indonesia’s 83,000 square-meter Natuna exclusive economic zone (EEZ) has been included within China’s nine-dash line.