Energy Ministry Prepares 12 O&G Work Areas for Auction in 2022

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 380.Pers/04/SJI/2021

Date: 26 October 2021

Energy Ministry Prepares 12 O&G Work Areas for Auction in 2022

The Ministry of Energy and Mineral Resources (EMR) is optimistic the performance of the oil and gas subsector will improve in line with the betterment in the national economy so that it can meet the investment target of USD22.59 billion in 2022. To achieve this target, the Ministry of EMR plans to offer 12 oil and gas work areas next year.

"We are optimistic that the oil and gas business will continue to improve, so we have set a target of USD22.59 billion for 2022," said Secretary of Directorate General of Oil and Gas, Alimuddin Baso, in a press conference titled "Policy Update: Performance of the Oil and Gas Subsector in Q3 2021" held on Monday (25/10).

In the auction process, continued Alimudin, the government would provide contract flexibility to investors according to Ministerial Regulation Number 12 of 2020. Investors can choose gross split or cost recovery scheme. In addition, oil and gas work areas will be offered with different profit splits. The greater the risk to be faced by a PSC contractor, the bigger the split. "This policy is expected to attract investors and revive the enthusiasm for the upstream oil and gas investment in Indonesia," said Alimudin.

This year, six work areas have been offered in the Oil and Gas Work Area Auction Round I, held from 17 June 2021 until Q3 2021. Four work areas have been offered through direct tender while the other two via regular tender. The work areas are South CPP, Sumbagsel, Rangkas, Liman, Merangin III, and North Kangean.

The government is also optimistic that it will fulfill the oil and gas lifting targets. Based on the results of a Working Meeting with Commission VII of the Indonesian House of Representatives (DPR RI), the oil lifting target in 2022 is set at 703 Million Barrels of Oil per Day (MBOPD) and natural gas lifting at 1,036 Million Barrels of Oil Equivalent per Day (MBOEPD), while the Indonesian Crude Price (ICP) is averaged at USD63 per barrel.

Additionally, the government will continue to make efforts to increase gas absorption by domestic industries in 2022. A 66% target has been set for domestic gas utilization. "We will continue to formulate appropriate policies and monitor the policies implementation through closer cooperation with stakeholders," asserted Alimuddin.

Alimuddin went on to say that Directorate General of Oil and Gas had also continued monitoring the results of gas price adjustment for certain industries and electricity generation. The policy is expected to provide a multiplier effect in the national economy's growth.

Development of oil and gas infrastructure will also be continued. According to the results of the Working Meeting with Commission VII of the DPR RI, 40,000 house connections will be installed under the gas network program in 2022, while 30,000 converter kit packages will be distributed to fishermen and another 30,000 packages will be handed out to farmers.

Additionally, the year 2022 will see the construction of Semarang-Batang transmission section, which is part of the Cirebon-Semarang transmission pipelines. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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