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Indonesian Energy Ministry Approves Merakes Development Project

ENERGY - Indonesia
January 2019

In December 2018, the Minister of Energy of Indonesia approved Eni’s investment plan for the Merakes project, located in Kutei Basin, offshore East Kalimantan. Eni is an Italian multinational oil and gas company operating in 71 countries worldwide.

The Merakes development project consists of drilling and construction of subsea walls with a dedicated transport system in water depths of up to 1,500 metres and connected to the Jangkrik Floating Production Unit (FPU). The gas will then be shipped to the Bontang LNG plant using existing facilities. This new production will contribute to the life extension of the plant and help meet EWQ1`EWDthe ongoing gas demand in Indonesia.

Eni also successfully drilled and tested the Merakes East prospect in East Sepinggan block, located 3 kilometers east of the Merakes Field. The proximity of this new discovery will allow Eni to maximize the synergies among the subsea infrastructures, as well as save time and cost of the execution of the future subsea development. Eni is the operator of East Sepinggan Contract Area through its subsidiary Eni East Sepinggan Limited which holds an 85% Participating Interest, while PT Pertamina Hulu Energi East Sepinggan holds the remaining 15%. 

The Eni BoD approval came just a few days after the conversion to the Gross Split Scheme of the East Sepinggan PSC (Production Sharing Contract) and the approval of the revised field development plan under the terms of the Gross Split by the Minister of Energy of Indonesia. Eni has agreed to use Gross Split Production Sharing Cost (PSC) scheme to develop the gas field as opposed to conventional cost recovery. The gross split PSC, which removes the cost recovery element, with all production directly split between the government and the participants, was introduced in late 2016 to stimulate investment in upstream oil and gas in Indonesia, by streamlining the regulation of the sector. 

(Sources: Offshore Engineer; Kallanish Energy; Eni)