Natural Gas National Strategic Project Can Help IKN Development

SKK Migas proposed two oil and gas projects, North Ganal in East Kalimantan and Asap Kido Merah in West Papua. Apart from distributing natural gas and LNG, the project is also for the fertilizer industry.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Proyek Strategis Nasional Gas Bumi Bisa Bantu Pembangunan IKN

SKK MIGAS

Activity in the North Ganal Working Area (WK) in East Kalimantan sea. In the WK managed by an Italian oil and gas company, Eni, initial estimates of 5 trillion standard cubic feet (TCF) of gas reserves have been discovered.

JAKARTA, KOMPAS — Observers positively assess the proposal for two oil and natural gas blocks in East Kalimantan and West Papua to become national strategic projects for energy development and improving the economy. If the proposal is approved, it will be able to answer the energy needs, which are relatively low in emissions, in the capital city of the archipelago or IKN.

The Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) has proposed two oil and gas projects, namely the North Ganal (Geng North) project in East Kalimantan and Asap Kido Merah (AKM ) in Bintuni Bay, West Papua, is a national strategic project (PSN). Apart from providing liquefied natural gas (LNG), this step is aimed at the fertilizer industry in Fakfak, West Papua.

Also read: Giant Gas Reserves Found in East Kalimantan Sea

Researcher from the Center of Energy and Mining Law Studies (Pushep), Akmaluddin Rachim, stated on Monday (4/12/2023) that, from the perspective of the domino effect that arises once it is operational, those projects will be beneficial for all parties. Thus, by being made into a PSN, it is a strategic move for the government and local authorities because it will boost the economy in the surrounding areas.

"The two projects have great potential and will play an important role for the region, especially in terms of job absorption and increasing regional income. New businesses will emerge around them, so it is hoped that the economy can be more evenly distributed," said Akmaluddin.

On the other hand, he also hopes that the social and environmental aspects of both projects are taken into consideration. "We do not want the existence of PSN, especially the new proposed ones, to cause social conflicts and environmental damage. The environment, social, and governance (ESG) must be considered in investments as well as exploitation of natural resources," he continued.

Executive Director of ReforMiner Komaidi Notonegoro also positively assessed the proposed PSN in the natural gas work area, especially North Ganal in East Kalimantan. This will be compatible with the development of IKN which will develop environmentally friendly energy. Even though it is still fossil energy, the emissions produced by natural gas are lower than other types of fossils.

"If it becomes a PSN, the attention of all parties will be better and hopefully licensing will be easier, so that it can be optimized for the needs of IKN. Because in the medium and short term, I project that we cannot fully utilize renewable energy. It is still from fossil fuels, and the most environmentally friendly fossil energy is gas," he said.

The problem in natural gas development in Indonesia lies in its infrastructure. Gas sources in Eastern Indonesia cannot be utilized in the Western regions.

If you have become a PSN, Komaidi continued, you must pay attention to the timeliness of the operational stages. He gave the example of the postponement of the operation schedule (on stream) for the Masela Block in Maluku due to inconsistencies and controversy within the government's internal scope regarding its management location (land or sea). In business, things like that will have a big impact because they relate to the economics of the project.

In addition, in the development of natural gas, the infrastructure must also be continually pushed forward. "The problem in the development of natural gas has always been with the infrastructure. The gas source in eastern Indonesia cannot be utilized in the west. To transport it, gas must first be converted into LNG (liquefied natural gas), and then converted again upon arrival. This double process causes the price to be expensive," he said.

KOMPAS/ADITYA PUTRA PERDANA

The atmosphere leading up to the signing of the sale and purchase agreement of ownership of the Masela Block and the memorandum of understanding (MoU) for the Strategic Partnership for Masela Block at the opening of the Indonesian Petroleum Association (IPA) Convention and Exhibition 2023 at ICE BSD, Tangerang, Banten, on Tuesday (25/7/2023). Shell's 35 percent participation rights in the Masela Block in Maluku have now been transferred to PT Pertamina (Persero) and Petronas. Inpex, on the other hand, holds 65 percent.

Previously, at the Geng North project operated by the Italian oil and gas company, Eni, natural gas reserves of 5 trillion cubic feet (TCF) were discovered. During a meeting with the Indonesian House of Representatives’ Commission VII last week, the Head of SKK Migas, Dwi Soetjipto, stated that the Geng North project will be developed with Indonesia Deepwater Development (IDD), a subsidiary of PSN, and operated by Eni.

Located in adjacent locations, the combined projects will be divided into a northern hub and a southern hub. "The total estimated production from both is 1.7 billion cubic feet per day. The revised field development plan (POD) will be completed in the fourth quarter of 2023. "The government will speed up everything and targeton stream(operations) 2028," said Dwi.

Also read: Improvement of Aging Oil and Gas Production Facilities Accelerated

Meanwhile, the Asap Kido Merah field in the Kasuri Working Area, where the groundbreaking recently took place, is operated by Genting Oil Kasuri Pte LTd. Dwi said that the project has a capacity of 330 million standard cubic feet per day (MMSCFD) with estimated operation in the fourth quarter of 2025.

Minister of Energy and Mineral Resources Arifin Tasrif, in Jakarta, Friday (1/12/2023), stated that he supported the proposal for the two projects to become PSN. "This is very strategic for us. Geng North, the LNG train can run up to five (train). Meanwhile AKM is to support gas at the fertilizer factory. "We need fertilizer to support food," he said.