Publications

PSC extension has been a hot topic in Indonesia during last few years as there will be many producing PSCs will expire in next 5-10 years. The debate on the issue of PSC extension is circled around who will be eligible to operate with the strong bias on who will get the benefit from remaining reserves. It is apparent that the extension has not been used as the momentum to unlock new barrels from the stranded discovered resource. It is also apparent that the fact 70% of current oil production comes from the expiring PSCs has not been seen as the critical issues. The purpose of this paper is to present the view of PSC extension from different perspective by focusing on 1) the objective of extension and 2) the chance of finding new resource in the expiring PSC acreages. These two main topics are more strategic in the light of diminishing domestic oil and gas reserves, lack of new discoveries over the last decade, and would accordingly help the government to set the right criteria of next operator. The objective of extension should focus primarily on managing base production and unlocking new barrels from stranded discovered resources such as marginal fields, undeveloped pay zones, improved recovery factor through investment of new technology and enhanced recovery. So far, Indonesia has produced 24 bnboe. A lot more is left untapped plus the undeveloped penetrated pay zones. Improvement of recovery factor would bring significant volume of new barrels. Therefore, the extension activity should focus over the producing area. Accordingly, it is not essential to extend the entire working area. The extent of area for extension can laterally be carved out around the producing fields and vertically over the producing layers and the undeveloped pay zones. The rest of the working area and stratigraphic interval can be freed up for exploration. Many of the expiring PSCs still hold very large acreage whilst the producing fields only covers ca. 10% of the size of the block. These areas including the stratigraphic intervals have been under an exclusive right for nearly 50 years. The extension should become the best momentum to release such acreage and give access to explorationists to venture in proven petroleum basins. Awarding the non-productive acreages and stratigraphic intervals as part of the extension will lock such areas for another 20 years or more and vanish exploration opportunity to find new resource.