Government Still Opens Offering WK Panai, Offers High Split Sharing Results

Director of Upstream Oil and Gas Business Development of the Directorate General of Oil and Gas Ariana Soemanto. (Doc. Ministry of Energy and Mineral Resources)

JAKARTA - The Ministry of Energy and Mineral Resources is known to still open up offers for the Panai Oil and Gas Working Area (WK Migas). Just so you know, WK Panai is one of the WKs that holds large gas potential with high yield splits.

"This is one of the interesting WK areas developed. Apart from being offered through a regular auction mechanism with high yield splits, WK Panai is located in a strategic location surrounded by infrastructure that supports and has hydrocarbon potential," said Director of Upstream Oil and Gas Business Development of the Directorate General of Oil and Gas Ariana Soemanto, quoted Tuesday, June 18.

Ariana explained specifically that the strategic location of WK Panai is located on land and off the coast of North Sumatra Province and Riau Province with an area of 5,180.46 km2. Around WK Panai there are several active WKs that have been proven to have hydrocarbon content, such as the Pekanbaru Coastal WK (CPP), Kisaran WK, Rokan WK, and Siak WK.

"As an exploration WK with an estimated gas resource of around 500 Billion Cubic Feet (BCF) and offered with a high risk split," continued Ariana.

In natural gas, he continued, contractors will get 45 percent after tax, while for petroleum, contractors will get 40 percent after tax.

"Of course, this is an interesting thing, where even with the location of the WK Panai in Sumatra, areas that are classified as mature, they have a higher split when compared to the WK split around them," said Ariana.

WK Panai is located in the Central Sumatra basin which is the basin of tertiary back arcs located in the central part of Sumatra Island. Central Sumatra basins are proven to be one of the most productive hydrocarbon-rich basins in Indonesia and Southeast Asia. Hydrocarbons in this basin were first known from oil seepage in the Lubuk Bendahara area, Rokan River published in 1920.

"This WK has both thermogenic and biogenic potentials, both of which can be an option for investors in its development," explained Ariana.

Ariana revealed that the commercialization aspect of the development of the WK is also a consideration point in addition to the existence of hydrocarbons. Located in strategic locations, namely North Sumatra and Riau, the marketing potential of hydrocarbons in this area is very promising, including the city gas program from the Government, electricity and industry.

One of the main considerations is that the government is currently building the Duri - Sei Mangkei Natural Gas Distribution Pipeline network which will connect natural gas consumers in the Sumatra-Java area, which will certainly open up opportunities for natural gas marketing widths from the Panai working area.

The government itself offers WK Panai with a split in natural gas after tax 55:45 (Government: Contractor) and oil split after tax 60:40 (Government: Contractor).

"This amount of split is included in the high risk split category so that it opens our perspective that even though it is in an area that is crowded with production work areas, the opportunity to get a high split remains open," said Ariana.

In order to support the interpretation of potential investors in analyzing WK Panai, the government has provided the WK Panai Data Package. The auction participants will get free access to data in the working area and only pay if it has been determined as a winner. This feature is an advantage given to potential investors in accordance with the provisions of the Minister of Energy and Mineral Resources No. 1/2022.

"The interesting terms and Conditions at the beginning of the Contract, government support is also provided in terms of the development of WK Panai in the future requiring incentives, both from tax facilities according to PP 27/2017 or PP 53/2017 and from incentive facilities for upstream business activities based on the Decree of the Minister of Energy and Mineral Resources No. 199/2021," explained Ariana.

This upstream business activity incentive facility, added Ariana, could later be in the form of additional splits, changes to First Tranche Petroleum (FTP), Investment Credit or acceleration of depreciation depending on what investors need later.

"The government's concern for investors is not only given at the beginning of the contract, but also during the implementation of the contract. The government will also provide the necessary policies in the development of WK Panai by referring to the provisions of the applicable laws," concluded Ariana.

WK Panai is offered with a minimum commitment of Past G&G and Acquisition of 2D 500 Km Seismic Data processing. Regular Auction Schedule for WK Panai as follows: