Petronas and SK Earthon bolster Indonesian presence with oil block wins

South Korea’s SK Earthon, the energy exploration and production (E&P) subsidiary of SK Innovation, Malaysia’s state-owned energy giant Petronas, and partners have signed production-sharing contracts (PSCs) with Indonesia’s oil and gas regulatory body, SKK Migas, for two exploration blocks in Indonesian waters.

The Serpang and Binaiya blocks were secured through a competitive bidding process in the second round of the Indonesia Petroleum Bid Round 2024, organized by the Indonesian government. 

Situated in what is described as one of Indonesia’s most promising hydrocarbon regions offshore in northeast Java, the Serpang block covers around 8,498 square kilometers. Petronas is the operator with a 51% stake, INPEX holds a 35% interest, and SK Earthon a 14% stake in the block.

The Binaiya block, located near the eastern coast of the Maluku Islands, covers 8,484 square kilometres. Pertamina is the operator with a 56% stake, with SK Earthon and Petronas holding 22% interests each.

According to Petronas, the initial three-year work commitments for both PSCs include conducting three geological and geophysical studies, as well as the acquisition and processing of 400 square kilometres of 3D seismic data, with the hope of identifying drillable structures.

Thanks to the latest awards, the Malaysian player now has 11 PSCs in Indonesia. It is the operator for the Ketapang, North Madura II, and North Ketapang PSCs, located offshore East Java, and Bobara PSC in West Papua offshore. On top of this, it is a joint venture partner in five PSCs located both onshore and offshore Sumatra, Natuna Sea, East Java, as well as East Indonesia.

“The signing of the Serpang and Binaiya blocks represents a pivotal step forward in PETRONAS’ enduring commitment to fortify our oil portfolio and regional partnership, in meeting the region’s energy demand,” said Executive Vice President and Chief Executive Officer of Upstream at Petronas, Mohd Jukris Abdul Wahab.

“The Serpang block presents a crucial avenue to bolster our presence in East Java—an established, high-potential basin endowed with robust infrastructure enabling timely and efficient monetisation of resources. Simultaneously, the Binaiya block opens a new frontier for PETRONAS to anchor a key hub in Eastern Indonesia, alongside our Bobara block.” 

As for SK Earthon, the expansion is said to strengthen its growing presence in Southeast Asia, said to be a key focus area for its global E&P portfolio. The firm now has a presence in Vietnam, Malaysia, and Indonesia, which it describes as Southeast Asia’s “Big Three” when it comes to oil production.

Additionally, its parent company, SK Innovation, is continuously exploring opportunities to expand its investments in the upstream sector in Indonesia, which is said to be emerging as a resource-rich “land of opportunity” in Southeast Asia.

“This achievement completes our Southeast Asia clustering strategy, connecting key resource hubs across Vietnam, Malaysia, and Indonesia,” said an SK Earthon representative. “Drawing from our successful resource development projects in Peru and Vietnam, we are committed to unlocking Indonesia’s potential as a significant resource development region.”

In Malaysia, SK Earthon secured operatorship of the SK427 block, located offshore Sarawak, in 2022. Last year, the company also acquired operatorship of the Ketapu block within the block .

As for Vietnam, the company and its partners made oil discoveries in Vietnam’s 15-1/05 and 15-2/17 blocks, located in the prolific Cuu Long Basin, earlier this year. The basin is said to produce over 50% of Vietnam’s oil and gas.