Italian Oil Company Invests US$15 Billion in Major Gas Project in East Kalimantan
Italian energy company Eni has officially made the Final Investment Decision (FID) for the development of two major offshore gas projects in East Kalimantan, namely Gendalo-Gandang (South Hub) and Geng North-Gehem (North Hub).
This decision comes approximately 18 months after the approval of the Plan of Development (POD) in 2024, indicating significant acceleration in the development of Indonesia’s deep-sea gas projects.
The development of these projects will utilise deep-sea production technology and existing infrastructure, including the Jangkrik FPU facility and the reactivation of Train F at the Bontang LNG Plant. This strategy is expected to reduce costs while accelerating the commercialisation of the gas.
For the South Hub, the development of Gendalo and Gandang will take place at depths of 1,000 to 1,800 metres, with seven production wells connected to the Jangkrik facility.
Meanwhile, the North Hub involves drilling 16 production wells at depths of 1,700 to 2,000 metres. This project will be connected to a new FPSO with a processing capacity of more than 1 billion cubic feet of gas per day and 90,000 barrels of condensate per day.
In total, both projects are estimated to have resource potential of up to 10 trillion cubic feet of gas (TCF) and 550 million barrels of condensate.
Gas production is targeted to begin in 2028, peaking in 2029, with a capacity of around 2 billion cubic feet of gas per day and 90,000 barrels of condensate per day.
The produced gas will be piped onshore to meet domestic needs and support LNG production at Bontang, for both the domestic market and exports. Meanwhile, the condensate will be processed and stored at the FPSO facility before being shipped by tanker.
This investment decision marks a key milestone in the development of Indonesia’s deep-sea gas resources and strengthens cooperation between Eni and the Indonesian government. Production of gas and LNG from these projects is expected to make a significant contribution to the nation’s long-term energy security.
The Head of SKK Migas, Djoko Siswanto, has welcomed the move positively. He views this FID as reflecting increasing confidence from global investors in Indonesia’s upstream oil and gas sector.
According to Djoko, this investment will not only increase national gas production but also have broad economic impacts, including the creation of a large number of jobs.
With an investment value exceeding US$15 billion, the project is now entering the stage of procuring goods and services as well as purchasing major components (long lead items).
Additionally, the project is planned to be part of the asset merger in a collaboration between Eni and Malaysian energy company Petronas to form a new entity (NewCo) targeting production of more than 500,000 barrels of oil equivalent per day in 2029.
Eni itself has been operating in Indonesia since 2001 and is one of the major gas producers in the Kutai Basin and Makassar Strait, which is now developing as a strategic national gas production area.