CNOOC Expands Indonesia Presence with New Exploration Blocks

CNOOC Ltd., China’s largest offshore oil and gas producer, announced that its subsidiaries have signed two Production Sharing Contracts (PSCs) with Indonesia’s upstream oil and gas regulator, SKK Migas, for exploration blocks in the country. The contracts, signed in June, are for the Gaea and Gaea II blocks, located near the Tangguh liquefied natural gas (LNG) project in southern Papua Barat Province.

According to the company, the two blocks cover a total area of approximately 12,000 square kilometers, and the initial exploration period is set for three years. The contracts were signed by CNOOC’s wholly owned subsidiaries along with subsidiaries of other Tangguh partners, EnQuest, and Agra.

In April, the Indonesian government confirmed that the Tangguh partners had been selected as winning bidders for the two blocks. Under the terms of the agreement, the Tangguh partners, which include BP Exploration Indonesia Ltd., MI Berau B.V., and ENEOS Xplora Inc., collectively hold 40% non-operating interests. CNOOC’s subsidiaries hold a 5.56% share of that interest. EnQuest holds a 40% operating interest in the blocks, while Agra holds a 20% non-operating interest.

The agreement allows CNOOC and its partners to expand their presence in Indonesia, a key market for oil and gas exploration in Southeast Asia. The proximity of the new blocks to the existing Tangguh LNG project is expected to create operational synergies, potentially streamlining future development and production activities if commercial discoveries are made. The investment underscores the continued interest from major international energy companies in Indonesia's upstream sector, which seeks to boost production to meet domestic and export demands.

The Tangguh LNG project is one of Indonesia's largest natural gas operations, with a significant role in the country's energy landscape. Expanding exploration activities in the surrounding area could lead to new gas reserves, which would further solidify Indonesia’s position as a major LNG exporter in the region.

By Michael Kern for Oilprice.com

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