PetroChina looking to tap Indonesia's LNG reserves

Updated 2018-02-01 15:13:01 China Daily

A worker inspects a plant at PT Donggi Senoro LNG in Banggai, Central Sulawesi province, Indonesia. Once a lucrative natural resources hub, Indonesia has been struggling to attract investment in recent years and is looking to Chinese companies such as PetroChina for capital and partnerships.

CNPC arm has technology to extract gas from remote, offshore locations scattered throughout many islands

Once a thriving and lucrative natural resources hub, Indonesia has been struggling to attract investment in recent years because of its declining production, as well as low global oil prices and uncompetitive upstream fiscal terms.

The country's existing oil and gas blocks are aging and its new reserves are in increasingly remote and more technically challenging areas such as deep water. As a result, Indonesia's oil and gas exploration and production sector has been grappling with falling investment in recent years.

Enter PetroChina International Companies in Indonesia, an arm of State-owned China National Petroleum Corp, the largest oil producer and distributor in the country.

While many international oil and gas giants are declining to invest in Indonesia, especially given currently low commodity prices, PetroChina International Companies in Indonesia vows to continue expanding business in the archipelago, using its enhanced oil-recovery technique to take up a bigger proportion of the sector in the energy-rich country.

"We have been actively looking for newer and bigger projects in Indonesia for expansion this year, in addition to keeping up production in Jabung, the company's largest block in Indonesia, which we have been working on for the past 15 years," said Gong Bencai, president of the company.

"To broaden its business in the country, the company aims to expand its business from onshore to offshore, focusing on both up, mid and downstream."

PetroChina entered Indonesia, one of its earliest international ventures, in 2002 with its acquisition of Devon Energy Companies.

The Indonesian government also expressed hopes that CNPC will bid for its new gas blocks and enhance investment in the country, hoping that Chinese oil technologies and know-how will further tap the potential of its oil and gas blocks.

In an interview with China Daily, Mohamad Zaini Md Norr, president of Malaysian state-owned energy company Petronas, expressed willingness to further cooperate with PetroChina in more blocks and sectors beyond the current Jabung block in Indonesia.

PetroChina's presence in Indonesia during recent years has resulted in opportunities for the nation, supporting its economic growth and improving the livelihood of its people, he said.

He admitted that current infrastructure facilities in new blocks and new reserves, most of which are located in increasingly remote and more technically challenging areas, are not as complete.

Amien Sunaryadi, chairman of SKK Migas, the country's regulator, echoed his comments, saying many of the islands in Eastern Indonesia are not developed. Still, it is expected that Chinese companies could further expand their business in Indonesia against the backdrop of the Belt and Road Initiative.

According to S&P Global Platts, Indonesia is rich in such resources as natural gas and is a major liquefied natural gas supplier, with the Bontang, Tangguh and Donggi Senoro LNG facilities producing 18.83 million metric tons of LNG in 2016. Its oil and gas sector, developed some 100 years ago, has been a very mature market.

However, Indonesia lacks infrastructure to reach those resources in rural areas across a sprawling archipelago of more than 18,000 islands, S&P said.

Sunaryadi said he hopes PetroChina could further develop Indonesia's oil and gas sector by leveraging its advanced technology, including enhanced oil recovery, and advantages in infrastructure construction expertise, including the erection of LNG distribution facilities.

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