Jakarta, CNBC Indonesia – The Ministry of Energy and Mineral Resources (ESDM) revealed that as many as 50 work area (WK) or oil and gas (oil and gas) block contracts were terminated or returned to the state during the 2020-2023 period.
The Director General of Oil and Gas (Dirjen Migas) of the Ministry of Energy and Mineral Resources, Tutuka Ariadji, said that 11 of the 50 oil and gas blocks that were terminated were non-conventional oil and gas blocks.
The non-conventional oil and gas working areas are either shale oil blocks or coal bed methane (CBM) working areas.
“It has increased from 49 to 50, they are terminating. But this is from 2020 to 2023. Termination of accumulation,” said Tutuka to CNBC Indonesia in the Energy Corner program, Tuesday (17/10/2023).
“Of those that exist, there are actually 11 unconventional or non-conventional oils that we know, some of which are shale oil, or the ones that are currently more numerous are actually Coal Bed Methane, CBM,” he said.
Tutuka said that as many as 11 non-conventional oil and gas working areas that were returned to the country had actually been developed for a long time, but were considered less prospective to continue to the operational stage.
“It has been developed for a long time, but apparently many of them are not prospective enough, so they are not continued,” he added.
Meanwhile, the remaining 39 oil and gas working areas that were terminated were conventional oil and gas blocks.
“The 39 is conventional,” he said.
Tutuka said that later his party would re-auction the terminated oil and gas working areas, but they still had the potential to be developed. Thus, not all terminated oil and gas blocks will be re-auctioned.
“And we are honest, we are honest in that matter, we give (re-auction) if we can still develop it, we will auction it again or carry out a joint study,” he explained.
Previously, the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) said that 49 oil and gas contracts would be terminated or returned to the state. However, now Tutuka said, this number has increased to 50 oil and gas contracts.
According to him, a total of 50 oil and gas contracts will be returned to the country, accumulated from termination from 2020-2023. The oil and gas contract is bound for the 2008-2015 period.
Head of SKK Migas, Dwi Soetjipto, said that the decision to terminate the oil and gas block was partly triggered by oil and gas contractors having financial or funding constraints to continue exploration activities.
“Yes, why is it over (the exploration period)? Because he doesn’t have money, right? Most of the time, because he doesn’t have money, he doesn’t work on it until the time runs out,” said Dwi when met at the Ministry of Energy and Mineral Resources Building, Jakarta, quoted Monday, (16 /10/2023).
On the other hand, Dwi revealed that efforts to find a solution so that the oil and gas WK is not terminated is no longer possible. Therefore, both parties, namely the government and the Cooperation Contract Contractors (KKKS), finally agreed to take the termination option.
According to Dwi, after the 49 CAs return to the country, the government will re-auction them again with various attractive offers. For example, by reducing the amount of the signature bonus, as well as improving the sharing split or profit sharing between the state and oil and gas contractors.
“So a re-assessment will be carried out, especially those who will take part in the auction, will study the potential like this and they will really pay attention to what has been terminated for a long time, this may not be attractive, yes, they will definitely submit an offer which will make this block more attractive for investors and contractors, but what “Most of the time this happens because the current contract holder does not have sufficient financial capacity,” he explained.
[Gambas:Video CNBC]
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