The government announced on Wednesday that US oil giant Chevron had decided to withdraw its proposal to extend its contract for the Makassar Strait block, which expires in 2020.

The company said the block was uneconomical, and that it would be removed from its Indonesia Deepwater Development (IDD) project.

The IDD is one of the biggest natural gas projects in the country that targets producing 1.23 million standard cubic feet per day (mmfcd) of gas and 50,750 barrels condensate per day (bcpd) by 2023. The first phase in Bangka Hub started production in 2016.

The project covers three blocks, the Makassar Strait, Rapak and Ganal, with the latter two to expire respectively in 2027 and 2028.

“We decided to terminate the block [Makassar Strait] and exclude it from the IDD project. The existing operators, Chevron, Pertamina and Sinopec, have said they weren't interested anymore. So we will tender it soon,” said oil and gas director general Djoko Siswanto of the Energy and Mineral Resources Ministry.

Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) chairman Amien Sunaryadi said the auction for the block would take place in about three months.

On June 29, Chevron proposed an extension to its production sharing contract (PSC) for the Makassar Strait block, along with the Rapak and Ganal blocks. In early July, however, the government ordered the company to renew their proposal and exclude Rapak and Ganal to reduce the IDD's cost, as it was still in cost recovery. (bbn)