Indonesia is ambitiously planning to bring in $200 billion in new oil investment as local production declines and demand grows.
As part of the plan, Bloomberg reports, Jakarta will allow foreign energy companies to bid for 14 oil and gas blocks, all untapped, sweetening the deal with incentives such as tax-free imports of equipment and technology.
Indonesia is currently producing some 800,000 barrels of crude daily – about half of what it consumes – but this is expected to climb to over 1 mln bpd, to reduce the country’s dependence on imports, which this month are estimated to have reached 8.4 mln barrels.
Over the 1st quarter, Indonesia’s average monthly import rate was 10.55 million barrels.
Indonesia, like China, has been suffering from the depletion of domestic fields as well as from insufficient investments over the last few years.
As a result, state-owned energy major Pertamina is looking for production boosts abroad.
Since 2014, the company has grown its overseas production capacity to 150,000 barrels of oil equivalent daily through acquisitions and partnerships.
The latest acquisition, of French energy company Maurel & Prom, added 30,000 bpd to its capacity.
To date, the company has exposure to 9 oil-producing countries, including Algeria, Iraq, Tanzania, and Nigeria and is negotiating the acquisition of 2 oil fields in Russia.
Last year, Rosneft and Pertamina struck a preliminary deal for the Indonesian company to buy into the Chayvo and Russkoye fields, but talks have stalled, apparently, and the finalization of the acquisitions is uncertain.
Pertamina is also interested in producing assets in Iran that hold combined reserves in excess of 5 million barrels of crude.
The company is already engaged in feasibility studies at 2 of these fields, whose combined daily production is 74,500 barrels of oil.
At the moment, Indonesia consumes some 1.6 million bpd of crude oil and Pertamina produces 308,000 bpd of this.
The company recently announced plans to boost its output by 42 % this year, up to 438,000 bpd, but this is still well below what the country consumes, so external help would certainly come in handy.
At the same time, as Indonesia’s Energy and Mineral Resources Minister Jonan told Bloomberg, that both upstream and downstream are important for the government, so efforts are also being directed at expanding the country’s refining capacity.
Here, Pertamina is working with Rosneft and Aramco.
With Rosneft, the Indonesian company will build the Tuban refinery, with a capacity of 300,000 bpd, with the Russian major planning to take a 45-% interest in the venture.
Indonesia is one of OPEC’s minor producers, which actually left the cartel last November before the production cut deal was reached, because it couldn’t afford to cut its already low output.
Indonesia is also one of the countries where demand for crude substantially exceeds output.
Author: Irina Slav
