IDD project's FPU off Kalimantan, Indonesia; Source: Chevron

Eni’s ‘significant’ new gas discovery opens doors to potential production hub tied to Bontang LNG

Italian oil and gas giant Eni has made a new gas discovery in the Kutei Basin offshore Indonesia, which comes with the potential to contribute substantially to the creation of a new production hub in the northern part of the basin. As a result, the oil major believes that this could be connected to the Bontang LNG facilities on the coast of East Kalimantan, further exploiting its available ullage capacity.

IDD project's FPU off Kalimantan, Indonesia; Source: Chevron

According to Eni, a “significant” gas discovery has been made in the Geng North-1 exploration well drilled in North Ganal PSC, about 85 km off the coast of East Kalimantan in Indonesia. The preliminary estimates indicate a total structure discovered volume of 5 trillion cubic feet (tcf) of gas in place with a content of condensate estimated up to 400 Mbbls. The firm highlights that the acquired data will allow the study of the options for a fast-track development.

Furthermore, Geng North-1, which was drilled to a depth of 5,025 meters in 1,947 meters water depth, encountered a gas column about 50 m thick in a Miocene sandstone reservoir with excellent petrophysical properties that has been the subject of an extensive data acquisition campaign.

A well production test (DST) has been performed for a full assessment of the gas discovery and although limited by the test facilities, it has allowed to estimate a well capacity of up to 80-100 mmscfd and about 5-6 kbbld of condensate. The Italian player elaborates that more than 5 tcf of gas in place is estimated to be present in undeveloped discoveries within the area of interest – in addition to Geng North – while a significant multi-tcf exploration potential is under maturation through the ongoing studies.

Eni North Ganal Limited, holding 50.22% participating interest, operates the block, with Neptune Energy North Ganal BV and Agra Energi I Pte Ltd as partners, holding the remaining 38.04% and 11.74%, respectively. The company claims that the new discovery confirms the effectiveness of its strategy aimed at creating value through its knowledge of geological plays and the application of advanced geophysical technologies.

The ongoing exploration campaign, along with the recent acquisitions, is in line with the Italian giant’s energy transition strategy to progressively shift its portfolio mix towards gas and LNG, targeting 60% in 2030, and to increase its LNG equity portfolio. The company confirms that Indonesia and Southeast Asia in general play “a relevant role” in this strategy.

The Geng North discovery is adjacent to the Indonesia Deepwater Development (IDD) area that includes several stranded discoveries located within the Rapak and Ganal PSC blocks. Eni recently decided to acquire Chevron’s interests in these assets, increasing its participating interest and acquiring the operatorship. Significant synergies between the two areas are envisaged in terms of gas development options.

In addition, the acquisition also provides the opportunity to fast-track the development of the Gendalo and Gandang gas project (around 2 tcf of gas reserves) through Eni’s operated Jangkrik facilities. The firm has been operating in Indonesia since 2001 and its portfolio of assets entails a current equity production of approximately 80,000 barrels of oil equivalent per day from the Jangkrik and Merakes fields in East Kalimantan.

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The Geng North discovery comes shortly after the announcement of the Italian oil major’s agreement to acquire Neptune Energy, whose completion will allow to further strengthen the firm’s position in the North Ganal Block. The Italian giant decided to scoop up Neptune’s entire portfolio aside from its operations in Germany and Norway.

While the German operations will be carved out prior to the completion of this acquisition, the Norwegian assets will be taken over by the oil major’s majority-owned Vår Energi. These deals come with an aggregate enterprise value of $4.9 billion.

Eni has also been busy bringing new projects online. At the end of August 2023, the Italian giant started production from an oil and gas field offshore Côte d’Ivoire less than two years after the discovery in September 2021 and less than a year and a half after the final investment decision (FID) was made.