Indonesian gas potential burns dimly

A series of contractual production-sharing and long-term-supply spats pitting the Indonesian government against multinational energy companies and big natural-gas importers in Japan has recently tarnished Indonesia’s reputation as a reliable business partner. It has also undermined the gas sector’s overall earning potential – crucially at a time when global prices have surged to near-record highs.

Indonesia has some of the largest known pools of natural gas in

the world, with total estimated reserves of 187 trillion standard cubic feet (scf), according to the Energy Ministry. But a number of nationalistic policy signals have recently alienated new foreign investors and inhibited the country’s ability to tap new supplies efficiently.
Yet for most of the country’s untapped reserves, Pertamina is not in a position financially or technically to go it alone. Industry analysts contend that the high carbon-dioxide levels of the natural-gas deposits discovered at Natuna D-Alpha would make it difficult for technically challenged Pertamina to extract efficiently. The same analysts say developing the Alpha B block would require upwards of $25 billion in capital investments – a sum beyond all local companies’ financial reach.

At the same time, the need to start exploration for new gas reserves and to commence production on proven sites is paramount for the sector’s viability. That said, many politically connected Indonesian operators are nonetheless pursuing a much larger stake in exploiting and delivering the country’s energy resources.

Asia Times