Malaysia’s national oil company Petronas is considering acquiring further upstream acreage offshore Indonesia’s Aceh province as it seeks to develop more gas projects in the Southeast Asian nation. Significantly, more incentives are expected to be offered to encourage exploration investment.
The Aceh Upstream Oil and Gas Management Agency (BPMA) said late August that Petronas Carigali is carrying out studies in the Seuramoe Block. Indonesian company Aceh Energy has also been studying the potential of the Bireun-Sigli Block, which has been declared a working area.
Petronas is expected to finish its study by the end of this year and the government is expected to put the blocks up for auction under the director offer mechanism, reported Petromindo. Under the mechanism, Petronas and Aceh Energy will have the first right to explore the respective blocks.
Harbour Energy’s (LON:HBR) recent gas discovery at the Timpan-1 exploration well in its Andaman II Block offshore Aceh has reignited interest in the area. The find lies in a structure stretching from Aceh into the Andaman Sea, an offshore region that is home to the platforms that supplied ExxonMobil’s old six-train liquefied natural gas (LNG) Arun export complex that lifted Indonesia into the global LNG trade in the early 1970s.
A string of successful gas discoveries could potentially be incorporated into a joint development to improve project economics.
BPMA claims that several international oil and gas companies have expressed interest in developing oil and gas fields offshore Aceh, particularly in the wake of Harbour Energy’s initial exploration success.
However, it’s worth noting that Harbour has cautioned that “permeability was on the low side of expectations” at its play-opening deepwater Timpan-1 exploration well offshore Indonesia in the North Sumatra basin. Still, the initial result bodes well for the frontier area and could open up more petroleum plays, which are thought to be gas prone.
The BPMA is offering extended exploration terms as well as tax exemptions to make exploration more attractive offshore Aceh. The Indonesian government has also improved the profit sharing split between the government and investors. The share will be adjusted based on risk – the higher the risk, the more investors will get.
Petronas farmed into Repsol’s Andaman III deep-water production sharing contract off Aceh, Indonesia, in December 2019. At that time Petronas said the “latest acquisition supports Petronas’ long-term growth plan in Indonesia and is a testimony to our commitment to support the development of the oil and gas industry in Indonesia.”
“Both Petronas and Repsol are committed to working with the Aceh Oil and Gas Management Agency and the Government of Indonesia, in further developing the oil and gas industry in Aceh,” said Petronas.