Indonesia plans to offer 54 oil and gas blocks over 2024-2028 to boost E&P

The Indonesian government plans to offer 54 potential onshore and offshore oil and gas blocks over 2024-2028, an upstream senior official said May 16, as the country looks to combat declining production and boost exploration in untapped areas to meet growing demand.

Of the 54 blocks, direct offers are likely expected for half of them, while the remaining 27 blocks are expected to be offered through regular tenders, said energy and mineral resources ministry's upstream oil and gas business development director Ariana Soemanto at the IPA Convention and Exhibition in Banten.

"In the period 2024-2026, there are 27 areas of joint study that are expected to be [offered as] the next exploration blocks. Most of the candidates are in the west of Indonesia where the basin is already well-known as a prolific basin," he said.

Although the region is considered "mature", it remains under-explored, said upstream regulator SKK Migas' adviser Nanang Abdul Manaf.

"Several open areas [in western Indonesia] have been identified for potential future bidding. Under-explored places are identified both in open and active working areas," he said.

Abdul Manaf raised examples like the South Sumatra Basin, which is expected to hold about 11.4 billion barrels or equivalent of oil and gas, even after more than 18.7 billion boe of resources have been discovered.

So far, 21 blocks in western Indonesian region had been acquired either through direct offers or regular tenders since 2021, said Soemanto, adding that the area remains favorable for investors.

Direct offers for Indonesian oil and gas blocks usually begins with a joint study between a potential bidder and the government, and a formal bid will be placed in a government-led auction after the study concludes. Such a method is often preferred by investors to procure new blocks as they would have an advantage compared to a regular tender.

Earlier this week, Indonesia had launched its first oil and gas bidding round of the year with five blocks on offer.

Regulations planned

Plans are underway for the Indonesian government to introduce a new regulation to further simplify gross split terms in production sharing contracts (PSCs), with variable split requirements lowered to convenience contractors, while the base split will be made more competitive for them, said Soemanto.

The new regulation will also allow more flexibility in PSCs to cater for both conventional and unconventional hydrocarbon discoveries, he added.

This comes as the Indonesian government had introduced more attractive tender terms from September last year to draw in more upstream investments.

Earlier this week, Indonesia had also committed to adding new oil and gas working areas annually to boost exploration in untapped oil and gas basins to meet growing demand, as the country strives towards its national production target of lifting 1 million b/d of oil and 12 Bcf/d of gas by 2030.

Meanwhile, a separate regulation for CCS development in oil and gas projects is also in the works, which could include details on preparing and offering permits for carbon storage areas, tender processes, storage fees and royalty rates, said Soemanto.

The draft regulation came after the country had issued a presidential decree in January to allow CCS operators to set aside 30% of their storage capacity for imported carbon dioxide.

Indonesia is expected to have a storage potential of 572 gigatons of CO2 in saline aquifers and an additional 4.85 gigatons of CO2 in depleted oil and gas reservoirs for CCS initiatives, its energy and mineral resources ministry said earlier this year.