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Jakarta Post

US shale heavyweight EOG Resources dips toe in Indonesian oil, gas exploration

  • Norman Harsono
    Norman Harsono

    The Jakarta Post

Jakarta   /   Wed, September 9, 2020   /   04:06 pm
US shale heavyweight EOG Resources dips toe in Indonesian oil, gas exploration An aerial picture shows a general view of an offshore oil platform in Bahrain on April 4, 2018. Houston-based EOG Resources, one of the United States’ top shale oil and gas producers, is testing the waters of Indonesia for oil and gas exploration. (AFP/stringer)

Houston-based EOG Resources, one of the United States’ top shale oil and gas producers, is testing the waters of Indonesia for oil and gas exploration.

The company recently applied for membership with Indonesia's Upstream Oil and Gas Special Regulatory Taskforce (SKK Migas) after a two-week work visit in July 2019, said the task force in a statement on Tuesday.

EOG, SKK Migas and the Indonesian government are conducting a two-year study, slated to end in December, on potential resources, reads the statement.

“We found good early indications of potential unconventional oil and gas in Indonesia,” said SKK Migas planning deputy Jaffee Arizon.

EOG declined to comment, explaining in an email to The Jakarta Post that it did not usually do so for activity outside known development areas.

Unconventional oil and gas resources, such as shale and tight oil, are more technically challenging and costly to recover than conventional resources for geological reasons.

But for Indonesia, a country with declining oil reserves, such resources present an opportunity, however slim, to raise production.

At 1,940 thousand barrels of oil equivalent per day, Indonesia's oil and gas output was 10.7 percent below target as of June 2020, SKK Migas data show.

However, EOG has signaled plans to focus on existing assets while global crude oil prices were low.

“Our first priority is to generate high returns with every dollar we spend even at low oil prices," said EOG Resources CEO William Thomas in a statement on March 16.

Crude oil prices are not expected to recover to 2019 levels until at least 2022, according to several estimates.

Oil futures fell again on Wednesday after a sharp slide in the previous session as a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand, Reuters reported.

Brent crude slipped 19 cents, or 0.5 percent, to US$39.59 a barrel on Wednesday morning Jakarta time after dropping more than 5 percent on Tuesday to fall below $40 a barrel for the first time since June.

US crude, meanwhile, fell 24 cents, or 0.7 percent, to $36.52 a barrel, having fallen nearly 8 percent in the previous session.