Eni secures Indonesian approval for $18bn gas development projects

Eni has achieved a significant milestone with the Indonesian government’s approval of two major Plans of Development (PODs) for gas fields in the Kutei Basin. This approval is a crucial step toward establishing a new production hub, dubbed the Northern Hub, which is expected to play a pivotal role in Indonesia’s energy landscape.

The approved plans cover the Geng North (North Ganal PSC) and Gehem (Rapak PSC) fields, both part of the Indonesia Deepwater Development (IDD) project, which Eni took over after acquiring assets from Chevron. These developments, along with the Gendalo and Gandang fields (Ganal PSC), represent a combined investment of approximately $18 billion (IDR 280 trillion). This massive project aims to boost Eni’s production in the region to about 2 billion cubic feet per day (bcf/d) of gas and 80,000 barrels per day (bopd) of condensates, supporting both domestic supply and international exports.

Northern Hub: A Strategic Initiative

The Northern Hub, which forms the backbone of this development, is centered around the Geng North discovery, announced by Eni in October 2023. The field holds an estimated 5 trillion cubic feet (TCF) of gas and 400 million barrels of condensates. This development will be facilitated through the use of a newly constructed Floating Production Storage and Offloading (FPSO) unit, which will handle the processing of up to 1 bcf/d of gas and 80,000 bopd of condensates. The gas will be transported to onshore facilities at the Santan terminal and further integrated into the East Kalimantan pipeline network. The condensates will be stabilized and stored onboard the FPSO before being evacuated via shuttle tankers.

Gendalo and Gandang Fields: Extending Production

In addition to the Northern Hub, Eni’s development of the Gendalo and Gandang fields is expected to enhance the existing infrastructure, particularly the Jangkrik Floating Production Unit (FPU). These fields will add around 2 TCF of gas to Eni’s portfolio, with the development extending the production plateau of the Jangkrik field by at least 15 years, ensuring a steady supply of gas to the Bontang LNG facility and the domestic market.

Strategic Partnerships and Future Exploration

These projects underscore Eni’s strategic collaboration with Indonesia’s upstream oil and gas regulator, SKK Migas. This partnership has been instrumental in accelerating the approval process, mere months after the initial discoveries and acquisitions were completed. The extension of the IDD licences for the Ganal and Rapak blocks by 20 years further solidifies Eni’s long-term presence in Indonesia.

Looking ahead, Eni plans to initiate an extensive drilling campaign in the Kutei Basin over the next four to five years. The region is believed to hold over 30 TCF of gas reserves, with significant potential for further discoveries. This exploration drive aligns with Eni’s broader strategy of combining exploration expertise with strategic asset acquisitions, thereby reinforcing its leadership position in one of the world’s most promising energy basins.

Eni’s CEO, Claudio Descalzi, highlighted the importance of these developments, stating that the Northern Hub represents a “game-changer” for the company in Indonesia, reflecting a consistent strategy that merges exploration with strategic acquisitions. This initiative is expected to have a substantial impact on local content, enhance gas supply for domestic use, and contribute to global energy security.

Eni, which has been operating in Indonesia since 2001, currently has an extensive portfolio of assets in various stages of development and production. The company’s operations in East Kalimantan already produce around 95,000 barrels of oil equivalent per day (boe/d), with the new developments poised to significantly boost these figures in the coming years.

This approval marks a crucial step toward finalizing the investment decisions for these projects, expected to transform Eni’s operations in Indonesia and contribute significantly to the country’s energy landscape.