Natuna block to produce 1,000 mmscfd of gas in 2020

REPUBLIKA.CO.ID, JAKARTA - The Indonesian government set a target of producing 1,000 million standard cubic feet of gas per day at the East Natuna block, located in Riau Islands, in 2020. Evita Legowo, the director general of oil and gas in the Ministry of Mines and Energy, said that on Thursday.

She added that the signing of the cooperation contracts (KKS) was expected to be done in 2012 and the production of 1,000 MMSCFD of gas would begin in 2020. The director of Pertamina Upstream, M Husen, said the gas production at East Natuna would later reach its peak of 4,000 MMSCFD, which would last for 20 years, before declining.

Husen said Pertamina was ready to start its operations and was only waiting for the government to sign the cooperation contracts this year. "We have already got a company to handle the East Natuna operations," he added.

According to Husen, the proposal mentions that Pertamina plans to develop the East Natuna block by using a pipeline instead of an LNG plant in order to cut costs. He said the government should carry out a review by an independent consultant, because the block had substantial gas reserves.

"For every one cubic foot of gas produced, as much as three cubic feet of carbon dioxide (CO2) must be injected back into the earth," Husen added.

He said Pertamina sought, among other fiscal incentives, a wider area of operation and longer lease period, because 30 years was not enough to earn adequate returns on the investment. "The preparation itself will take 10 years, so we ask for a management period of 40-50 years," Husen explained. With the East Natuna deal, he said, Pertamina would become the operator and owner of the largest stocks of gas in the region.

Under review

The government has commissioned the Oil and Gas Upstream Agency (BP Migas) to review the East Natuna development proposals submitted by PT Pertamina (Persero) and its partners ExxonMobil and Total. BP Migas has also appointed an independent consultant to review the proposals.

The Deputy Chairman for Planning at BP Migas, Haposan Napitupulu, said the assessment would be completed before August 19, 2012. "We will finish the study in August," he stated.

The government officially appointed Pertamina as the manager of the Natuna Block D Alpha, which is now called East Natuna, through the Minister Letter on the Status of Natuna D Alpha Gas. The Natuna block contains an estimated 222 trillion cubic feet of gas.

However, it is likely that only 46 trillion cubic feet of gas would be produced, because 70 percent of its content is C02. Advanced technology and an investment of US$40 billion is required to separate and store the natural gas.