T

he Energy and Mineral Resources Ministry remains hopeful that it can complete on schedule the development of five national strategic projects in the upstream oil and gas sector, despite President Joko “Jokowi” Widodo’s order for an evaluation amid a decline in national oil and gas production.

Under the supervision of the Committee for Acceleration of Priority Infrastructure (KPPIP), the evaluation has been ongoing for two weeks on the progress of 245 strategic projects that enjoy special treatment, such as faster land acquisitions and a simpler business permit process.

The committee will scrap the projects from the government’s priority list if it believes their investors are unable to start construction or reach financial closure by 2019.

The list comprises five upstream oil and gas projects, namely the Masela block in the Arafura Sea, the Jambaran-Tiung Biru (JTB) field in East Java, the Jangkrik field and the Indonesia Deepwater Development (IDD) project in the Makassar Strait in East Kalimantan, as well as Train 3 of the Tangguh liquefied natural gas (LNG) plant in West Papua.

Tunggal, the Energy and Mineral Resources Ministry’s upstream oil and gas business development director, said the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) had been helping the ministry in closely monitoring the projects’ progress.

“The Bangka field of the IDD project, for instance, entered its production phase today. Hence, we are optimistic that all five strategic projects will be completed on time,” he told The Jakarta Post recently.

Estimated to cost around US$6.98 billion, the IDD project enables United States-based energy giant Chevron to develop the Bangka and Gendalo-Gehem fields in the Makassar Strait in two separate phases.

The Bangka field has been on-stream since August 2016 and currently generates 110 million standard cubic feet per day (mmscfd) of gas on average.

As for the Gendalo-Gehem field, Chevron is committed to completing the project’s preliminary front-end engineering design (pre-FEED) in mid-2018.

The Gendalo field is expected to produce 700 mmscfd of gas once it is on-stream in the fourth quarter of 2022.

The Gehem field, meanwhile, is projected to start producing 420 mmscfd of gas by the second quarter of 2023.

The Jangkrik field, which is not part of the IDD project but is also located in the Makassar Strait, has reached an average production of 600 mmscfd of gas, above the initial projection of 450 mmscfd, after its commencement in May 2017. The project’s total investment is estimated to reach $3.77 billion.

Voicing similar sentiments, SKKMigas secretary Arief Setiawan Handoko emphasized that no major problems had hampered the development of the five strategic projects, as the agency would warn the contractors should progress fall far behind the agreed schedule.

“As of today, everything is right on track,” he said.

State-owned energy giant Pertamina, which is responsible for developing the $1.54 billion JTB field, started construction in September 2017 and expects to begin producing 172 mmscfd of gas by 2021.

International oil and gas giants Inpex and Royal Dutch Shell, meanwhile, are expected to complete pre-FEED work on the Masela block by the third quarter of this year in order to submit their plan of development (POD) by the end of 2018.

Inpex and Shell are set to develop the Masela block with a targeted production capacity of 9.5 million tons per annum (mtpa) of LNG and 150 million mmscfd of natural gas.

However, the block might only be able to commence production in 2027.

As for the $11.13 billion Tangguh Train 3, British oil and gas giant BP has been constructing the project since 2017 and is expected to start producing 3.8 mtpa of LNG by the second quarter of 2020.

Komaidi Notonegoro, executive director of the Jakarta-based energy think tank ReforMiner Institute, said the five strategic projects were relatively “safe” as no significant problems were threatening their progress.

However, several changes may later be made in their PODs, namely concerning production capacity, due to the recent hike in global crude prices, he added.

In addition to accelerating its strategic projects, Indonesia, a former member of OPEC, plans to conduct roadshows in the US and Europe later this month to lure investments from the world’s top oil and gas companies as it faces aging fields back home.