The Indonesian government plans to invite bids for 14 conventional and unconventional oil and gas blocks in its first 2016 round as part of efforts to increase the country's output, a senior official said Friday. "We plan to announce it next month," Oil and Gas Director General at the Energy and Mines Ministry Wiratmaja Puja told reporters, adding the total was comprised of 11 conventional and three unconventional blocks.
Four conventional blocks will be offered via regular tender onshore Sumatra, Papua and offshore Kalimantan, and seven via direct proposal in Sulawesi, Kalimantan and Papua, mostly onshore blocks, Puja said.
The unconventional blocks comprise one shale gas and two coalbed methane blocks, he said. "We are also carrying out geological and geophysical studies on potential oil and gas blocks that will be offered until 2019," he added.
The government is eyeing offering at least 27 potential oil and gas blocks over 2017-2019, according to Oil and Gas Directorate General data.
Indonesia has two mechanisms for tendering blocks; a regular bidding system and a direct offer mechanism, under which a company can indicate its interest in any block not offered by the government, which is then opened up to bids from other investors. If no higher bid is submitted, the original company is automatically awarded the block.
The government at end March approved state-owned oil and gas company Pertamina's development plan for its Nunukan block in North Kalimantan bordering Malaysia and the Philippines, which is said to contain 8.37 million barrels of crude and 280.24 billion cu ft of gas, according to Puja.
"The block is expected to start production in 2019 with an accumulative output of 1.05 million barrels of crude and 212.66 billion cu ft of gas. The block's production is small but it becomes important amid the lower crude price and its location on the borders," Puja said.
Pertamina subsidiary Pertamina Hulu Energi holds a 64.5% stake in the block alongside PRL Ventures Indonesia B.V (12.5%) and Videocon Indonesia Nunukan Inc (23%). Development of the block is estimated to cost $556.5 million and revenue to be generated at $441.5 million, Puja said.
The government has also extended local company Medco Energi Internasional's license for the Lematang block in South Sumatra that expires in 2017 by 10 years as Pertamina was not interested in taking it over, Puja said. Medco holds 51.1% stake in the block, which is currently producing at around 40 billion British thermal unit/day.
Indonesia is making concerted efforts to ramp up exploration and development activity in the country as it has seen its crude output fall due to natural decline at ageing fields.
The country withdrew its OPEC membership in 2008 and rejoined in 2015, Platts reported earlier.
