Oil Production Continues To Subside, ESDM Improves To Attract Idle Region

Acting Director General of Oil and Gas Dadan Kusdiana. (Photo: Maria Trisnawati / VOI)

JAKARTA - The Ministry of Energy and Mineral Resources (ESDM) is carrying out various efforts to maintain the production of oil and gas commodities (oil and gas), although they are faced with various challenges in production operations.

Acting Director General of Oil and Gas Dadan Kusdiana said that currently there are various great opportunities to increase petroleum production.

The first is an increase in petroleum production from the offshore field of Buton Regency, Southeast Sulawesi, with a total initial potential of more than 1 billion barrels of oil.

"The Ministry of Energy and Mineral Resources through the Directorate General of Oil and Gas has approved the implementation of the Joint Study Area Buton to Pertamina, Petrochina, and Petronas. The effort we are currently doing is to accelerate the completion of the Joint Study, so that later the area can be immediately directed offer and developed," said Dadan, Tuesday, July 23.

The second effort is to increase the recovery factor, partnering with Oil and Gas Company from China.

Dadan said, after the working visit of the Minister of Energy and Mineral Resources Arifin Tasrif to China, many Chinese oil and gas companies, which then arrived for efforts to increase Recovery Factors, such as CNPC, CNOOC, and Sinopec.

"For example, Sinopec, they fielded a specialist team. Of the 16 areas offered by Pertamina Hulu Energi (PHE), five areas have been selected, namely Rantau, Tanjung, Pamusian, Jirak and fire," he explained.

Meanwhile, in terms of policy, latest, the Ministry of Energy and Mineral Resources issued a Decree of the Minister of Energy and Mineral Resources regarding Guidelines for Return of Potential Working Areas that were not worked on in the Context of Optimizing Oil and Gas Production.

One of the regulations regulated by this regulation is the Migas Cooperation Contract (KKKS) obligation to immediately seek a potential oil and gas working area that is not worked on (idle) or return it.

"Against the potential oil and gas working area (WK), idle, efforts need to be made, it cannot continue to be silenced. Currently, it is being inventoried and an effort is being immediately taken to optimize it. There are at least 4 optimization efforts that can be carried out later," said the Director of Upstream Business Development. Oil and Gas Ariana Soemanto.

The potential oil and gas section (WK) criteria that are idle include production fields that have not been produced for 2 consecutive years, or there is a field with a Plan of Development (POD) other than the 1st POD which has not been carried out for 2 consecutive years.

In addition, if there is a structure in the exploitation WK that has received a disclosure status and has not been carried out for 3 consecutive years.

Against the idle oil and gas WK, first, the KKKS is asked to immediately work on the potential WK part so that it is not silenced.

Second, the KKKS is working on the idle potential WK section through collaboration with other Business Entities for the application of certain technology in a business manner.

Third, the KKKS proposes the idle potential WK Section to be further managed by other KKKS in accordance with the provisions of the legislation.

"And fourth, the KKKS returns the idle potential WK Section to the Minister of Energy and Mineral Resources, taking into account post-operational obligations, the obligation to return upstream oil and gas data, and other obligations, to be further determined and offered to become a new WK in accordance with the provisions of the legislation," Ariana added.

The four efforts are in accordance with the evaluation, plans and timeframe recommended by the SKK Migas or the Aceh Oil and Gas Management Agency (BPMA).

Previously, it was also conveyed that there were at least three major policies that made the oil and gas sub-sector more attractive in the last three years. First, the policy of improving the auction terms and oil and gas block contracts.

This includes, among others, a split of contractors that can reach 50 percent, a minimum bonus signature, a direct offer for oil and gas blocks without joint study, a cheaper bank guarantee, and a gross split or cost recovery type of contract.

Second, the exploration privilege policy. Contractors can move the commitment of exploration activities to open areas outside the blocks they are working on.

"In addition, the extension of the exploration period is 10 years, and the additional exploration time is more than 10 years. If this policy does not exist, then the North Ganal gas disclosure may not happen," Ariana explained.

Third, the upstream oil and gas incentive policy for the Decree of the Minister of Energy and Mineral Resources Number 199 of 2021.

This policy is to improve the economy of contractors in the middle of the road, through repair of split contractors, investment credit, accelerated depreciation calculations and improved parameters affecting other economies.