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OPINION: Indonesia and Big Oil need to embrace to unlock offshore gas potential

OPINION: Indonesia and Big Oil need to embrace to unlock offshore gas potential

Despite being designated a project of 'National Strategic Interest’, progress has stalled in recent years on Chevron’s Indonesia Deepwater Development (IDD), which includes the Gendalo and Gehem fields.

Another such designated project, the Inpex-operated Abadi liquefied natural gas development, also faces challenges.

Prior to the outbreak of coronavirus, industry sources had tipped US supermajor Chevron to sell out of IDD ahead of the second development phase, with Italy’s Eni seen in pole position to acquire its operated stake.

Despite protracted negotiations with Indonesia’s upstream regulator SKK Migas, the US player has struggled for years to come up with a commercially viable development solution to underpin its multi-billion dollar investment.

Today, Chevron’s future in Indonesia is looking even more uncertain given that it lost out to Pertamina in its bid to secure an extension for its producing Rokan oil asset.

Meanwhile, market sources recently again tipped Inpex’s sole Abadi partner Shell as looking to exit the project and divest its 35% interest.

Initially, there had been industry talk that Shell’s touted departure was due to the Indonesian government’s decision to veto the originally proposed floating LNG development.

However, Shell now appear to be considering pulling out of Abadi — which will exploit upwards of 10 trillion cubic feet of gas reserves — purely on commercial grounds.

Indonesia has already seen ExxonMobil walk away from exploiting the giant Natuna D-Alpha (now East Natuna) gas field, albeit on technical as well as commercial grounds.

The republic seems increasingly unable to reach commercially agreeable terms with ‘Big Oil’.

This has seen industry heavyweights scale back their investments against the backdrop of Pertamina taking over assets rather than teaming up in a partnership.

Such deals may yet, however, be pulled off and — without any major concessions over the negotiating table — Indonesia’s discovered giant gas resources could finally be exploited.
News OPINION: Indonesia and Big Oil need to embrace to unlock offshore gas potential

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OPINION: Indonesia and Big Oil need to embrace to unlock offshore gas potential
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