Govt announces programs to accelerate Natuna development

The government has prepared three programs aimed to accelerate the development of oil and gas around Natuna Islands in South China Sea as part of the efforts to counter the claims of China that it is part of its traditional fishing ground.

The three programs are preparing regulation for the development of Natuna, changing fiscal terms for the development of economic oil and gas fields and extending exploration period.

This is was said by Director General of Oil and Gas IGN Wiratmaja during a press conference on Friday. Present at the event were Minister of Energy and Mineral Resources Sudirman Said, Chairman of SKK MIgas Amien Sunaryadi, Chairman of BPH Migas Andy Sommeng and Head of National Exploration Committee Andang Bachtiar.

Wiratmaja said there are 16 working areas located in Natuna Islands. Six of them are producing working areas, ten are still in exploration stage including three now in termination process because their contracts have expired and the contractors failed to make discovery.

The six working areas are South Natuna Sea Block B operated by Conoco Phillips Inc; Natuna Sea Block ?A? operated by Premier Oil Natuna Sea B.V; Kakap oleh Star Energy (Kakap Ltd) dan Udang Block operated by TAC Pertamina EP Pertahalahan Arnebrata Natuna. The two others are Dua Sembilang operated by Mandiri Panca Usaha and Northwest Natuna b Santos. The last two working areas now have gained the status of exploitation but they haven?t yet started production.

?Of the six blocks, South Natuna Sea Block B is the largest in the terms of production with its production now reaching 19,888 bpd of oil and 235 mmscfd of gas,? Wiratmaja explained.

Production from Natuna now 4,890.3 mmscfd of gas and 25,113 bpd of oil and condensate. Proven reserves of the region amounts to 4 tcf of gas and 201.401 million barrels of oil and condensate.

Of the ten exploration blocks, one block, namely Tuna, has actually made discovery. However, since it is located in a faraway area and the reserve is not quite big. ?Using the current split and fiscal terms, Tuna is not viable for production. We thus need this acceleration program so that the block can come into production,? he said.

Wiratmaja added that the government will offer six working areas located in Natuna. Four them, namely East Natuna, Bukit Barat, Dorang and Emas Putih will be offered this year. Two others, namely Durian and South Tuna will be offered next year.

East Natuna
With regards East Natuna block, Wiratmaja said the block has gas and oil reserves with gas lying on the top and oil on the bottom. The gas reserve is estimated four times as much as much the one in Masela block, while the oil reserve is relatively small, but can exploited more quickly. It is estimated that within three years, the block can start producing oil at a rate of 7000-15,000 barrels per day.

In order to accelerate the development of East Natuna block the program that needs to do is making a technological study and market review. State owned oil and gas firm PT Petamina (Persero) has asked for two years of time to carry out the study and review, but the government has told firm to cut short the time to 1.5 years so that the government may sign a new PSC for the block in 2017.

The government envisages a mini refinery will be built to process the oil from Natuna to meet the fuel needs of the Indonesian National Military (TNI). ?If East Natuna already has production facilities, Tuna block, which is located on northernmost part of Natuna, can be brought into production by sharing the facilities,? Wiratmaja said.

Editing by Johannes Simbolon