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Indonesia: Ganal and Rapak blocks contract extension to be based on gross split scheme

JAKARTA ( – The Indonesian Ministry for Energy and Mineral Resources (MEMR) insists of applying production sharing contract (PSC) based on the gross split scheme for the Ganal and Rapak Blocks should the government extend the contracts. The existing contracts of the two blocks will expire in 2027 and 209.

Ganal and Rapak blocks, located in Makassar Strait, are part of the Indonesia Deepwater Development (IDD) project, being developed by PT Chevron Pacific Indonesia.

Chevron has submitted contract extension request for the two blocks before the company kick off the development of the IDD project, Indonesia’s major deepwater project.

Arcandra Tahar, deputy minister for energy and mineral resources, said the ministry is currently evaluating the proposal of Chevron. “It (the extension) has to be based on gross split scheme,” Tahar was quoted by Kontan as saying.

The existing contract is based on cost-recovery-based PSC scheme.

So far, there are 37 oil and gas working areas that have implemented the gross-split scheme. Of these, 14 working areas were offered during the 2017-2018 tender process. The remainings blocks are already in operation whose contracts were extended, such as Offshore North West Java (ONWJ) block, Sanga-Sanga block and South East Sumatera (SES).

Meanwhile, two existing block contracts were amended, namely East Sepinggan block being developed by Eni SpA and Duyung Block operated by West Natuna Exploration Ltd.

The gross split scheme was launched in early January 2017, following the issuance of a Ministerial Decree (Permen ESDM No. 8/2017) on oil and gas contracts based on gross split scheme, replacing the existing cost recovery scheme. The ruling was effective since Jan. 16, 2017.

Under the gross split scheme, the government’s state budget will no longer be burdened with paying out recoverable costs to the oil and gas contractors. The operational costs to explore and exploit oil and gas are now a responsibility of the oil and gas contractors.

IDD Revised PoD
Arcandra Tahar added that the energy ministry expects the Revision of the PoD of the IDD project phase II to be completed in the first quarter of 2019.

He, however, declined to disclose the approved estimated investment to develop the project.

Chevron’s IDD project offshore East Kalimantan includes three PSC blocks: Ganal, Rapak and Makassar Strait, and the development of five gas fields, namely Bangka, Gehem, Gendalo, Maha and Gandang.

The first stage of the Indonesia Deepwater Development (IDD) Project, the Bangka development, began production in August 2016 and has resulted in the successful delivery of eight cargoes of LNG from the Bontang LNG terminal.

After Bangka, the next IDD projects to work on are the Gendalo and Gehem fields. The combined production is expected to reach 1.1 billion cubic feet of gas and 47,000 barrels of condensate per day.

Chevron is one of the world’s leading integrated energy companies and through its Indonesian subsidiaries, has been present in Indonesia for 94 years. With the ingenuity and commitment of highly skilled and dedicated employees, Chevron Indonesia leads as one of Indonesia’s largest producers of crude oil.

From our onshore oil fields in Riau, Sumatra and our offshore fields in East Kalimantan, we have produced more than 13 billion barrels of oil to meet the energy needs of Indonesia’s growing economy. (*)

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