Indonesia Plans New Policies, Build FPSO

The Indonesian government plans to implement a number of policies to maintain and attract the interest of upstream investors in the country, as a result of weaker response from its 2015 oil and gas bidding round.

Last year’s auction indicated that Indonesia became less attractive for investors, with many showing interest in exploring in other countries such as Vietnam, according to SKK Migas.

Therefore, the Indonesian Ministry of Energy and Mineral Resources (ESDM) is reviewing incentives to increase the exploration of new reserves in the country. One such initiative is the extension of exploration period. For example, the exploration period which was originally restricted to six years can be extended to 10 years.

Currently, investors keen to view oil and gas data in Indonesia have to submit an application to the government, plus pay a fair some of administration cost. Therefore, ESDM is preparing a ministerial regulation to open oil and gas data to investors.

The ministry’s director general of oil and gas, IGN Wiratmaja Puja said Indonesia has many large oil and gas reserves in Sumatra, Java, Kalimantan, Sulawesi, Papua and Maluku.

Furthermore, SKK Migas said it will provide full support to the development of the Indonesian maritime sector, as it believes that an active national shipping industry can also contribute positively to the oil and gas sector. One of which is through a new shipbuilding policy for floating production storage and offloading (FPSO) vessels.

“FPSOs which were originally planned to be constructed and converted abroad, are now required to be made, converted and maintained in the country,” said Amien Sunaryadi, head of SKK Migas. “The rules of our policies will be collated and published.”

This implementation will see companies play a bigger role in shipbuilding in the country, especially on FPSOs needed for exploration and production activities. According to the Jakarta Globe, Indonesia has more than 100 shipyards, which produce an average of about 100 ships for different purposes each year.

Earlier this week, SKK Migas said it had approved 18 field development plans from January-April 2016, amounting to US$1.496 billion in investment. Production from these fields located in the western and eastern regions could commence between 2016-20. The estimated cumulative production from the 18 projects is 45 MMbbl of oil and condensate and 271 Bcf of natural gas. Some $3.015 billion in revenue is also expected.

This year Indonesia will be hold bidding round for 21 new oil and gas blocks, comprising of 13 conventional and eight non-conventional blocks.

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