Indonesia bets on 10 new oil and gas blocks to boost sluggish output

Ariadji acknowledged the setback but hinted at potential future opportunities for Natuna D-Alpha, stating, “There were no bids for Natuna D-Alpha, but we are still evaluating other options, such as joint studies or re-tendering it later this year.”

Indonesia, once a Southeast Asian energy powerhouse, is aiming to reignite its hydrocarbon engine by offering 10 new oil and gas blocks for exploration and development this year. The move comes amidst concerns about the country’s declining reserves and sluggish production, which has fallen short of ambitious targets in recent years.

Announcing the plan on Tuesday, senior energy ministry official Tutuka Ariadji declared, “We are planning to offer 10 blocks in 2024 as part of our efforts to improve energy security and increase national production.” This follows Indonesia’s 2023 auction round, which saw 10 blocks offered, with two in the Papua region (Akimeugah-1 and Akimeugah-II) still in the bidding process due to be concluded early this year.

The bid for the coveted Natuna D-Alpha block in East Natuna, however, proved a disappointment. Despite boasting an estimated 230 trillion cubic feet (6.5 trillion cubic meters) of gas resources, one of the largest in the world, the block failed to attract any proposals during the second round of auctions last year. Ariadji acknowledged the setback but hinted at potential future opportunities for Natuna D-Alpha, stating, “There were no bids for Natuna D-Alpha, but we are still evaluating other options, such as joint studies or re-tendering it later this year.”

Analysts attribute the lack of interest in Natuna D-Alpha to its high carbon dioxide (CO2) content, raising concerns about environmental compliance and potentially higher operational costs. The Indonesian government, aware of the growing shift towards cleaner energy sources, has pledged to prioritize sustainability in its oil and gas exploration efforts.

Indonesia’s renewed focus on oil and gas exploration reflects its dependence on hydrocarbon resources for meeting its domestic energy needs and generating revenue. Despite falling production volumes, the country remains a net exporter of both oil and gas, playing a crucial role in regional energy security.

However, experts warn that relying solely on fossil fuels might hinder Indonesia’s long-term development goals. With the global energy landscape rapidly transforming towards cleaner alternatives, Indonesia needs to diversify its energy mix and invest in renewable energy sources like solar, wind, and geothermal.

“While securing new oil and gas reserves is important for the present, Indonesia cannot afford to ignore the future,” remarked energy analyst Dr. Maya Puspita Sari.

The success of Indonesia’s latest oil and gas auction round, along with its future development plans for the lucrative Natuna D-Alpha block, will be closely watched by both industry players and environmental advocates. The decisions made now will not only determine Indonesia’s energy security in the short term but also shape its path towards a sustainable and diversified energy future.