Application of Fiscal Incentives for Development of East Natuna Gas Field for Long-Term National Natural Gas Demand

Authors

Marwan Batubara, Department of Chemical Engineering, Faculty of Engineering, Universitas Indonesia, Depok 16424, Indonesia
Widodo Wahyu Purwanto, Department of Chemical Engineering, Faculty of Engineering, Universitas Indonesia, Depok 16424, IndonesiaFollow
Akhmad Fauzi, Department of Resources and Environmental Economics, Faculty of Economics and Management, Institut Pertanian Bogor, Bogor 16680, Indonesia

Abstract

East Natuna gas field, which has proven reserves of 46 trillion cubic feet, is projected to meet long-term natural gas needs. However, CO2-content of the gas reserves reaches 71%, leading to expensive development costs. This research investigates the feasibility of the field based on several fiscal incentives. Firstly, gas supply-demand until year 2040 was analyzed. Then, based on the analysis, the field was developed using high CO2 gas separation technology to produce gas of 1300 MMSCFD in 2023, 2600 MMSCFD in 2031, and 3900 MMSCFD in 2039. Finally, the economic feasibility was assessed using cash flow analysis in accordance with Indonesia’s production sharing contract scheme. The results show that the supply-demand gap continues to increase and thus the development is urgently needed. The development cost is estimated around US$ 27.59 billion. The gas selling prices are assumed at US$ 8/MMBTU for wellhead, US$ 11/MMBTU for pipelines, and US$ 11/MMBTU for LNG. To achieve minimum IRR value of 12%, the government needs to offer incentives of 30-year contract period, profit sharing of 55%: 45%, first tranche petroleum to 10%, and tax holiday of 10 years. Toll fee for Natuna-Cirebon pipeline is US$ 2.3/MMBTU at IRR of 12.6%.

Bahasa Abstract

Penerapan Insentif Fiskal dalam Pengembangan Lapangan Gas Natuna Timur Guna Memenuhi Kebutuhan Jangka Panjang Gas Bumi Nasional. Lapangan gas Natuna Timur yang mempunyai cadangan terbukti 46 TCF diproyeksikan untuk memenuhi kebutuhan jangka panjang gas nasional. Karena cadangan gas mengandung hingga 71% CO2, maka dibutuhkan biaya pengembangan yang tinggi. Penelitian ini mempelajari kelayakan ekonomi lapangan melalui penerapan beberapa insentif fiskal. Pertama, pasokan kebutuhan gas hingga tahun 2040 dianalisis. Kemudian, berdasarkan hasil analisis tersebut, lapangan gas dikembangkan dengan teknologi pemisahan CO2 berkadar tinggi guna memproduksi gas sebesar 1300 MMSCFD di tahun 2023, 2600 MMSCFD di tahun 2031, dan 3900 MMSCFD di tahun 2039. Kelayakan ekonomi proyek kemudian dievaluasi menggunakan analisis aliran uang (cash flow) berdasarkan pola kontrak bagi hasil versi Indonesia. Hasil yang diperoleh menunjukkan gap pasokan kebutuhan gas terus meningkat, dan karenanya pengembangan lapangan sangat mendesak dilakukan. Pada harga gas di wellhead US$ 8/MMBTU dan US$ 11/MMBTU untuk gas pipa/LNG, agar proyek layak dikembangkan dengan IRR minimum 12%, maka pemerintah harus memberikan insentif berupa periode kontrak selama 30 tahun, pola bagi hasil 55% : 45%, first tranche petroleum 10%, dan tax holiday 10 tahun. Adapun toll fee untuk pipa Natuna-Cirebon pada IRR 12,6% adalah US$ 2,3/MMBTU.

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Recommended Citation

Batubara, Marwan; Purwanto, Widodo Wahyu; and Fauzi, Akhmad (2015) "Application of Fiscal Incentives for Development of East Natuna Gas Field for Long-Term National Natural Gas Demand," Makara Journal of Technology: Vol. 19: Iss. 2, Article 4.
DOI: 10.7454/mst.v19i2.3036
Available at: https://scholarhub.ui.ac.id/mjt/vol19/iss2/4