February 25, 2016
JAKARTA (rambuenergy.com) – After submitting revision of the Indonesia Deepwater Development (IDD) in early January this year, Chevron Indonesia Company, a giant US oil and gas company, has requested the Indonesian government to postpone the development of the IDD project, due to collapse of oil price, a top official at the Energy and Mineral Resources Ministry said.
Director General for Oil and Gas at the energy ministry I.G.N. Wiratmaja Puja was quoted by katadata as saying that Chevron has requested the ministry to postpone the planned development of deepwater fields Gehem and Gendalo in Makassar Strait.
“They (Chevron) has made the request recently. We are considering it,” he said.
The news certainly a bad news for Indonesia as the country is trying to bring investment including in oil and gas industry.
The news also came in as the development of Masela Block still drags on due to political debate within the government ranks. Rizal Ramli, Coordinating Minister for the Economy, backed by domestic oil and gas supporting business players, are trying to push the government to develop onshore LNG plant, instead of floating LNG processing plant (FLNG) as proposed by Inpex Corp of Japan, the operator of the block.
Chevron tried to revive the plan development of the field early this year after delaying it for sometimes.
The IDD project is the first major deepwater project in Indonesia with estimated investment of US$12 billion.
Chairman of SKK Migas Amien Sunaryadi said early January that SKK Migas would kick off meeting to evaluate the revised PoD of IDD project in second week of January.
He said the revision was made on the Gendalo and Gehem fields. The revision of the POD was made as the company recalculate the project and take into account the higher oil and gas reserves.
Under the proposed revision, Chevron projects the Gendalo field to come on stream in 2022, while Gehem field will come onstream in 2023.
Two years ago, Chevron decided to postpone the development of the IDD project as it needs to recalculate the cost of investment. It was also seeking to extend its production sharing contract (PSC) much earlier, which is yet to be approved by the government.
The mega IDD project investment plan has been revised several times. In 2008, the project cost was estimated at US$6 billion and further increased to US$12 billion in 2013.Chevron secured a plan of development (PoD) approval from the government in 2008. The project involves four production sharing contracts (PSC), namely Ganal, Rapak, Makassar Strait and Muara Bakau.
The Makassar Strait PSC will expire in 2020. Chevron has requested the government to extend the Makassar Strait PSC to 2028, so that the four PSCs will expire at the same time.