There is a potential farm-in or funding opportunity for one of the largest undeveloped oil discoveries offshore Indonesia.
The Ande Ande Lumut field is one of the largest undeveloped oil discoveries in Indonesia and Prima Energi have shown commitment to push towards a final investment decision (FID) quickly. They have a team that understands the asset and understands Indonesia, and, at least, there is certainly potential to achieve value from developing the field at current oil prices, based on modelling by Robert Chambers, APAC energy specialist and upstream director at Holt Energy Advisors.
In July 2023, Prima Energi acquired 100% interest in the Northwest Natuna PSC from Mitsui & Co. Since acquiring the PSC, Prima Energi have been progressing options to develop the Ande Ande Lumut (AAL) heavy oil field and, in early-April, they launched tenders for FEED contracts for the key offshore facilities, with a view to awarding these contracts as soon as mid-year.
Whilst this is very positive, Chambers believes that Prima Energi will likely need to find funding options for the development prior to taking FID, with a farm-in partner being one of the potential options. It should be noted that he is not aware of a formal process, but sees this as the logical next step.
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Since acquiring the asset, Prima Energi have progressed rapidly, submitting a revised PoD, which was approved in early-March 2024. The first phase of the approved PoD has an estimated development cost of about US$300 million, reported Chambers.
The recoverable resource estimate that forms the basis of the current PoD is significantly below previous resource estimates. Therefore it's possible that there is plenty of scope for upside, notes Chambers.
The last couple of years have seen much more positive sentiment towards upstream investors in Indonesia, and this has been followed-up with some positive actions. However, it is not all sunshine and rainbows, and some of the past issues continue to provide caution to investors, as Energy News Bulletin recently reported.
AAL – one of the largest undeveloped oil discoveries in Indonesia
Northwest Natuna is a 461 km2 single block located next to the Malaysian border in shallow water (less than 70 metres). Northwest Natuna contains one of the largest undeveloped oil discoveries in Indonesia. Located in shallow water (~70 m) of Northwest Natuna, at depths of ~1,100 m
Reserves & Resources
The technology of geo-steered horizontal drilling, coupled with the latest completion equipment (screens, ICDs etc) make this heavy oilfield fully viable. The technology – Under the current approved AAL development plan, 42.7 MMSTB of oil is expected to be produced. Surrounding the AAL Field are several prospects with significant prospective resources for future development.
Production
Development of the AAL Oilfield is currently underway in order to obtain first oil by the end of 2026. A Central Production Platform (CPP) will be installed which will be connected to a bridge-linked and spread-moored Floating Storage Offtake (FSO) vessel. Synergies between Prima Energi and marine operations give real operational experience and significant savings opportunities.
