Indonesia opens up its shale resources to three foreign players

Map of indonesia
Source: DollarPhotoClub

Indonesia’s energy and mining ministry on Monday awarded its second shale gas exploration block to a consortium of foreign oil firms that included New Zealand Oil & Gas Ltd – Reuters reported yesterday.

New Zealand Oil & Gas along with Canada’s Bukit Energy and Pacific Oil & Gas Ltd in Hong Kong, won the tender to explore the Kisaran block in North Sumatra, said Saleh Abdurrahman, the ministry’s spokesman.

NZOG is an exploration company with interests in New Zealand, Indonesia, and Tunisia. The company has been pursuing opportunities in Indonesia since August 2011, when it was awarded a Joint Study Agreement (JSA) over open acreage in northern Sumatra.

Two more JSA in Sumatra were awarded in December 2011 and a third JSA application was made.

As the company’s website states, also in December 2011, NZOG acquired 90% of a company which has an interest in the Kisaran exploration permit in Central Sumatra, effectively giving NZOG a 22.5% share of the permit. NZOG is to contribute US$6.5m toward the cost of the first well, and will share any future cost on a participating interest basis.

Bukit Energy Inc. is a private corporation in Alberta, Canada, that is pursuing conventional production opportunities in Indonesia and is a leader in the emerging unconventional tight resource plays. Bukit has a strategic relationship with NZOG to identify and secure Indonesian opportunities.

Pacific Oil & Gas is an independent energy resources development company whose upstream activities are concentrated on exploration, development and production of oil and gas on and around the island of Sumatra, Indonesia.

The newly-formed consortium agreed to commit more than $11.5 million, which will go to conducting a geology and geophysics study, a seismic survey and to dig at least one exploration well.

Indonesia is the tenth richest shale oil country in the world, according to the U.S. Energy Information Agency, with estimated shale oil reserves of eight billion barrels. The country is eager to explore its shale reserves in the hope that it will compensate for declining energy production from mature oil and gas fields.

Apart from investing at home, the Indonesian state-owned exploration company, Petromina, has been reported holding talks earlier this month with Canadian Talisman Energy to buy its Alberta-based Duvernay shale gas resources. With the investment in Duvernay shale development, Pertamina will explore oil and gas properties in Canada for the first time.

The former OPEC member, Indonesia has been struggling for years to attract enough investment to halt declining domestic output, which has dropped to about half of its 1995 peak of 1.6 million barrels per day.

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