Jakarta, CNBC Indonesia – The Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif has given his approval for the revised plan of development (POD) I of the Merakes and Merakes East fields which are operated by the Cooperation Contract Contractor (KKKS) from Italy, Eni East Sepinggan Ltd.
The approval was given through a letter from the Minister of Energy and Mineral Resources on 27 December 2022 which was a response to the recommendations submitted by the Special Task Force for Upstream Oil and Gas Activities (SKK Migas).
“We welcome the approval of POD I (revised) for Merakes and Merakes East Fields. The development of these fields will provide additional reserves in order to ensure supply to the East Kalimantan System so that the Bontang LNG refinery can operate more optimally,” said Head of SKK Migas Dwi Soetjipto in a written statement. , Tuesday (17/1/2023).
According to Dwi, his party will continue to encourage exploration and accelerate the development of oil and gas fields in East Kalimantan. Bearing in mind, this region has a strategic role while maintaining energy adequacy in the East Kalimantan region, including in the Archipelago’s National Capital (IKN) in the future.
“Given its strategic location as the capital city in the future, the upstream oil and gas potential in East Kalimantan will continue to be developed so that it can provide support for energy supply in the region,” said Dwi.
Meanwhile, the estimated cost required for the development of the Merakes and Merakes East Fields is US$ 3.35 billion or around IDR 50.76 trillion (assuming an exchange rate of IDR 15,154 per US$), consisting of investment costs or capital expenditure (Capex) of US$ 2.14 billion and operation expenditure (Opex) of US$ 1.26 billion.
“Apart from helping economic growth, direct investment or foreign direct investment like this will create a multiplier effect for the upstream oil and gas supporting industry because SKK Migas has made a policy so that PSC Contractors prioritize the use of domestic goods and services,” said Dwi.
As is known, the Merakes and Merakes East fields are part of the East Sepinggan Working Area which is managed by a Gross Split Production Sharing Contract. Assuming that this field will operate at the end of 2024 and will produce until 2032, the state is projected to receive revenues of US$ 3.8 billion or around Rp. 56.24 trillion.
“So that this contribution can be realized immediately, we hope that all stakeholders can support the development of the Merakes and Merakes East fields so that they can run smoothly according to the set targets,” said Dwi.
The approval for the revision of POD I for the Merakes and Merakes East Fields has resulted in obligations for the operator of the East Sepinggan Work Area, namely Eni East Sepinggan Ltd. Among these obligations is completing the Merakes and Merakes East Field development works according to the planned schedule.
In addition, operators are also required to continue the exploration program while maintaining the economics of the East Sepinggan Work Area. Operators are also required to comply with the provisions of offering 10% interest participation to BUMD, guarantee the availability of natural gas offtakers, and support government programs in the context of supplying natural gas, including for households (city gas) and road transportation.
The newly approved POD is a revision of the previous POD. The POD revision is necessary due to the additional reserves from the Merakes East Field and also because of the sharing facility of the two fields (Merakes and Merakes East Fields).
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