Indonesia's Major New Gas Find May Delay Arrival of Output Deficit

In the near- to medium-term, the Kali Berau Dalam-2 discovery will partially offset declining output from other domestic Indonesian fields, and reduce the country’s reliance on LNG.

SEATTLE (Oil Monster):  The discovery of a major new natural gas field in Indonesia may push back the day the country’s gas consumption outpaces its production and reduce its reliance on imported liquefied natural gas (LNG), officials and analysts said on Wednesday.

A consortium led by Spain’s Repsol found new gas resources at the Sakakemang block in South Sumatra in Indonesia estimated to contain at least 2 trillion cubic feet, the company said on Tuesday. Repsol claims the find is among the 10 largest made in the world over the past year.

“We hope early production can start the latest five years from now,” Arcandra Tahar, Indonesia’s deputy energy minister, told reporters on Wednesday.

If the new find at the group’s Kali Berau Dalam-2 well shows good results, Indonesia may be able to push back the current estimate for when it has a natural gas deficit, or when consumption is greater than domestic supply, from 2025, Tahar added.

To protect against the looming deficit, Indonesia’s state-owned energy company Pertamina recently signed a long-term contract with Anadarko Petroleum Corp to buy 1 million tonnes per year of LNG for 20 years from Mozambique. Anadarko is expected to make a final investment decision this year on the project, which is expected to be operational by 2024.

In the near- to medium-term, the Kali Berau Dalam-2 discovery will partially offset declining output from other domestic Indonesian fields, and reduce the country’s reliance on LNG, said Wood Mackenzie’s Research Director for Asia Pacific Andrew Harwood.

There is also potential for the volume estimate from the field to increase as appraisal of the find progresses, he added.

“Repsol and Indonesia are likely to want to fast-track the development of the discovery. We think 2024/2025 is a realistic estimate for first production,” he said adding that the field could produce around 300 million cubic feet per day of gas for about 15 years.

Repsol operates the well and holds a 45 percent stake, while Malaysia’s Petronas owns 45 percent and Japan’s Mitsui Oil Exploration (Moeco) the remaining 10 percent.

Courtesy: www.reuters.com