Ministry prepares strategy to develop oil, gas in Natuna Islands

The Ministry of Energy and Mineral Resources has prepared a strategy to develop oil and gas in the Natuna Islands, Director General of Oil and Gas IGN Wiratmaja said in a statement on Monday.

Wiratmaja however refused to disclose the strategy, saying it will be unveiled after he and SKK Migas? Chairman Amien Sunaryadi have reported it to Minister of Energy and Mineral Resources Sudirman Said.

He noted that at present there are 17 working areas which are situated in Natuna Islands, seven of which have come onstream, ten are still in exploration stage.

The seven producing blocks are Cakalang operated by Lundin Cakalang B.V; Kakap operated by Star Energi (Kakap Ltd); Natuna Sea Block ?A? operated by Premier Oil Natuna Sea B.V; Northwest Natuna operated by Santos Netherlands B.V; Sembilang operated by PT Mandiri Panca Usaha; South Natuna Sea Block B operated by ConocoPhillips Inc; and Udang operated by Pertamina EP.

The ten exploration blocks are located on the east and north. On the north, discovery has been made in Tuna block. However, it will only be economically viable to be developed if it is integrated with other blocks. ?We shall accelerate the development of working areas on the north and east. In order to be viable economically, the development of the blocks should be integrated. If they are developed on stand-alone basis, they will be not viable economically,? he said.

With regards East Natuna block, Wiratmaja said, since January 2016 the owners of the block ? PT Pertamina, ExxonMobil and PTT Thailand ? have carried out study to see the gas potentials of the block. The block is said to hold 200 tcf of gas, but the gas contains high CO2 elements, which makes it too costly to develop.

In order to accelerate the development of the block, the firms will first produce oil. ?East Natuna?s reservoir consists of gas on the top and oil on the bottom. Thus, we shall first extract the oil because the cost is lower,? he said.

Production sharing contract (PSC) on the block is being formulated and is expected to be signed as soon as possible. It is expected that within three years, the block can produce 7,000-15,000 barrels per day of oil.

The development of Natuna Islands is a key priority for President Joko Widido?s administration as part of developing areas in remote and border areas. Sea areas near Natuna Islands are among hot spots in the region, as several countries, including China, claims the areas are part of their territory.

Editing by Johannes Simbolon