Interim Energy and mineral resources minister Luhut Pandjaitan said Monday that the government had set a deadline for a consortium of oil and gas companies — consisting of state-owned oil and gas giant Pertamina, US-based ExxonMobil and Thailand’s PTT Exploration and Production (PTT EP) — to make a decision by Wednesday on what kind of production-sharing contract (PSC) it would sign for the East Natuna block.

The government had previously hoped that a PSC for both the oil and gas reserves in the Natuna Islands, Riau Islands, to be signed last month. However, the companies had postponed the signing over the terms and conditions offered by the government.

Luhut explained that during an earlier meeting, the consortium had requested that the PSC be signed in 2018.

“This has been put off long enough, since 2011 and we keep moving back and forth on it,” he said.

“They said they wanted more time, at least until 2018, but I said no and that there must be a decision made on Wednesday on what concrete steps will be made.”

East Natuna, which was previously known as the D-Alpha block, has proven gas reserves of 46 trillion cubic feet (tcf), but studies have shown that the gas field has a 72 percent concentration of carbon dioxide (CO2), making it costly to develop as extraction would need the newest technologies.

There is also an estimated oil reserve of 46 million stock tank barrels (mmstb) under the gas reserves, which could produce 7,000 to 15,000 barrels of oil per day (bopd).

Although the oil reserves are small, the government has claimed that it was economically viable to start development and start production in 2019 in parallel to the consortium’s continued study of the gas field.

The government has high hopes that the East Natuna block PSC would be signed soon in order expedite oil and gas production in the region.

Meanwhile, the Energy and Mineral Resources Ministry’s oil and gas director general, IGN Wiratmaja Puja, said the main issue was whether a PSC for the oil and gas reserves should be made together or separately as the development stages would start during different times.

The government has offered Pertamina a 60:40 profit scheme for the oil reserves, with the smaller percentage for the state-owned firm. Furthermore, the government has also offered a 55:45 scheme for the gas reserves.

Time is also ticking for the operators of the gas-rich Masela block. Luhut demanded that a plan of development (POD) revised from an offshore to an onshore scheme be completed before the end of the year.

“It must be completed by the end of the year,” he said.

The original development plan for an offshore scheme was submitted by Inpex and Shell in 2010, but the discovery of more extensive resources led contractors to submit a revised POD last year to adjust the floating liquefied natural gas (LNG) plant’s capacity to 7.5 million tons per year, up from 2.5 million tons. With the existing POD in hand, it was estimated that the gas field could start production by 2024.

However, the project took another U-turn when President Joko “Jokowi” Widodo decided that an onshore plant would be more beneficial to the local economy, forcing the contractors to go back and redo their POD and delay any development in the block.

This has led to predictions that the gas field will only start operating in 2026, just two years shy of Inpex and Shell’s contract expiration. However, the government’s push may encourage an earlier production start.

Meanwhile, Pertamina president director Dwi Soetjipto said that the consortium was still unsatisfied with the split scheme offered by the government, especially the ratio offered for the gas field.

“In principle, we are still discussing the government and investor take. The most important thing is that the proportions offered is not like those of the past. The East Natuna block has a high concentration of CO2, which needs more capital. This is why the percentage needs to be increased,” he said.

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