Indonesia – Oil & Gas

Indonesia has been active in the oil and gas sector for more than 130 years after its first oil discovery in North Sumatra in 1885. Indonesia continues to be a significant player in the international oil and gas industry.

Indonesia holds proven oil reserves of 3.7 billion barrels, and is ranked in the top 20 of the world's oil producers. Indonesia is ranked 10th in terms of world gas production, with proven reserves of 2,900 billion cubic feet in 2014. On a reserves basis this ranks Indonesia 14th in the world and third in the Asia Pacific region1 after Australia and China. Indonesia’s relevance in seaborne LNG is more critical.

Indonesia’s existing LNG facilities are based in Bontang in East Kalimantan, Tangguh in West Papua and Donggi Senoro in Sulawesi. Arun LNG, which was one of the world’s first LNG facilities and one of the biggest LNG exporters in the 1990s, has been converted into a storage and regasification terminal.

Indonesia has a diversity of geological basins which continue to offer sizeable oil and gas potential. Indonesia has 60 sedimentary basins including 36 in Western Indonesia. Fourteen of these are producing oil and gas. In under-explored Eastern Indonesia, 39 tertiary and pretertiary basins show rich promise in hydrocarbons. About 75% of exploration and production is located in Western Indonesia. The four oil-producing regions are Sumatra, the Java Sea, East Kalimantan and Natuna. The main gas-producing regions are East Kalimantan, West Papua, South Sumatra, Sulawesi and Natuna.

Oil

Oil is a major sector in the Indonesian economy. During the 1980s, Indonesia was a significant oil-exporting country. Since 2000, domestic consumption has continued to rise while production has been falling, so in recent years Indonesia has begun importing increasing amounts of oil. Within Indonesia, there are considerable amounts of oil in Sumatra, Borneo, Java, and West Papua Province. There are said to be around 60 basins across the country, only 22 of which have been explored and exploited. Main oil fields in Indonesia include the following:

·         Minas. The Minas field, in Riau in Sumatra, operated by the US-based firm Chevron Pacific Indonesia, is the largest oil block in Indonesia. Output from the field is around 20-25% of current annual oil production in Indonesia.

·         Duri. The Duri field, in Bengkalis Regency in Riau in Sumatra, is operated by the US-based firm Chevron Pacific Indonesia.

·         Rokan. The Rokan field, in Riau in Sumatra, operated by Chevron Pacific Indonesia, is a recently developed large field in the Rokan Hilir Regency.

·         Cepu. The Cepu field, operated by Mobil Cepu Ltd which is a subsidiary of US-based Exxon Mobil, is on the border of Central and East Java near the town of Tuban. The field was discovered in March 2001 and is estimated to have proven reserves of 600 million barrels of oil and 1.7 trillion cu feet of gas. Development of the field has been subject to on-going discussions between the operators and the Indonesian government.  Output is forecast to rise from around 20,000 bpd in early 2012 to around 165,000 bpd in late 2014.

Gas

There is growing recognition in Indonesia that the gas sector has considerable development potential. In principle, the Indonesian government is supporting moves to give increasing priority to investment in natural gas. In practice, private sector investors, especially foreign investors, have been reluctant to invest because many of the problems that are holding back investment in the oil sector also affect investment in gas. Main potential gas fields in Indonesia include the following:

·         Mahakam. The Mahakam block in East Kalimantan, under the management of Total E&P Indonesie with participation from the Japanese oil and gas firm Inpex, provides around 30% of Indonesia's natural gas output. In mid 2013 the field was reported to be producing around 1.7 bill cu feet of gas per day as well as 67,000 barrels of condensate. Discussions are currently underway about the details of the future management of the block involving a proposal that Pertamina take over all or part of the management of the block. Recently (October 2013) it was reported that Total E&P Indonesie had announced that it would stop exploration for new projects at the field. In 2015 the Energy and Resources Minister issued a regulation stipulating that the management of the block would be transferred from Total E&P Indonesie and Inpex to Pertamina.