Raras Cahyafitri, Sorong, West Papua – Resource-rich areas in eastern Indonesia, particularly Maluku and Papua, are expected to produce more oil and gas and contribute to the national output next year despite some hurdles including hard terrain and lack of infrastructure.
Both Maluku and Papua are expected to record 2,323 million standard cubic feet per day (mmscfd) this year, or equal to 26.2 percent of the country's national production. Meanwhile, oil production is expected to reach 16,408 barrels of oil per day (bopd), or about 1.9 percent of national production.
"The volume of production must increase next year," the Upstream Oil and Gas Regulatory Special Task Force's (SKKMigas) chief for representative office for Papua and Maluku areas Enrico Ngantung said on Tuesday without providing details.
Currently, there are 46 contracts and joint operations in the area. The biggest contributors to oil and gas production in Papua and Maluku are Tangguh field operated by BP Indonesia, the Kepala Burung field by Petrochina International (Bermuda), joint operation body of Pertamina and Petrochina at Salawati field, Klamono of Pertamina EP Field Papua, Kalrez and Citic Seram.
"There are many explorations in the eastern part of the country. Some contractors have not been able to discover oil and gas sources. However, we are thankful that KKKS [the oil and gas cooperation contracts] Genting Oil was successfully found abundant gas reserves and Petrochina also found prospective hydrocarbon," Enrico said.
The eastern part of the country is seen as a challenging area for oil and gas operations. Several giant companies, for example the US-based Exxon Mobil and Norway's Statoil, decided earlier this year to return their blocks to the government after years of unprofitable exploration.
There are some successful players, such as the Abadi field in the Masela Block operated by Japan's Inpex, which is estimated to have 18.47 trillion cubic feet of proved and probable gas reserves.
SKKMigas Jakarta office deputy for business support Sampe L Purba said several issues made oil and gas business in the area challenging. They include the topography of the areas, lack of geological information, poor infrastructure and the additional task of disbursing information to local communities about oil and gas exploration and exploitation.
"Special policies or incentives are necessary. Fiscal incentives can vary from more attractive profit sharing to tax cuts or easier permit issuance. Also, to support big investment, we also need stability and law enforcement," he said.
Stefanus Malak, the regent of Sorong, one of the significant oil and gas producing areas in West Papua, said that his administration has been trying to accelerate permit issuances for investors interested in putting money into his regency.
The central government is also encouraging a faster process for issuing permits to lure investors. "One week is the longest period for issuing permits at this point," he said.
Sorong is currently one of the oil and gas producing areas in West Papua, along with Raja Ampat and Teluk Bintuni.
Sorong regency currently hosts six producing contracts, which are owned by JOB Pertamina and Petrochina on Salawati, Petrochina International Bermuda, Pertamina Area Papua, Pertamina EP TAC IBN Holdico, Pertamina EP TAC Intermega Sabaku and Pertamina TAC Intermega Salawati.
The regency is estimating to see oil production of 3.1 million barrels and gas production of 4,158 million British thermal units (mmbtu) this year.