Indonesia to start natural gas output from two deepwater fields
The Jangkrik development field will include an FPU for the treatment of natural gas and condensates. Photo courtesy of Eni.
(Reuters) Indonesia expects to start natural gas production from two deepwater fields this year and next, even as major oil companies are reviewing the economics for other projects, a senior energy official said late on Thursday.
The Bangka project, majority owned by Chevron, will start operation in August, Wiratmaja Puja, the director general of oil and gas at Indonesia's Energy Ministry, told Reuters in an interview.
Italian oil firm Eni's Jangkrik project is 80% complete and is expected to commence operation in July 2017, he said.
Both projects are located in the Kutai Basin offshore East Kalimantan province where several projects are being planned under the name of the Indonesia Deepwater Development (IDD).
Two other IDD projects - Chevron's Gendalo-Gehem and Eni's Merakes - have been put on hold after oil and gas prices fell, Puja said.
The Indonesian government is in talks with the companies on providing more incentives to raise the internal rate of return for the deepwater projects to at least 25%, up from 10% to 15% currently, Puja said.
The companies have proposed incentives that include extending the length of the production sharing contracts for the deepwater projects beyond the initial 30 years because of their complexity and a longer exemption period for being obligated to sell to the domestic market.
Chevron has a 62% interest in the Bangka project, according to its website. The project has a design capacity of 115 MMcfd of natural gas and 4,000 bpd of condensate, a light oil typically produced in association with gas.
The Jangkrik project, which Eni holds a 55% stake, is expected to produce 450 MMcf of natural gas and 4,400 bpd of condensate, according to the project contractor Saipem's website.
Separately, Indonesia has offered 17 oil and gas blocks in an auction this year, including the deepwater Surumana block, Puja said.
Reporting by Wilda Asmarini; Writing by Florence Tan; Editing by Richard Pullin and Christian Schmollinger
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