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Chevron in talks with Eni to sell stake in Indonesia Deepwater Development: officials

Singapore — Oil major Chevron is in talks with Italy's Eni over the possibility of selling its stake in the Indonesia Deepwater Development project in offshore East Kalimantan in Southeast Asia, two senior government officials said Aug. 5.

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The talks are happening against the backdrop of Chevron's recent acquisition of upstream company Noble Energy for $5 billion and a global slump in oil and gas prices that has upended valuations of hydrocarbon reserves and forced energy conglomerates to reconfigure their portfolios.

If the sale goes through it could provide some certainty to the development of the gas fields under IDD that has been in limbo due to disagreements with the government. It would also mean the exit of yet another oil major from a flagship Indonesian upstream project amid resource nationalization concerns.

"Now [Chevron's stake] is being offered to Eni. What I know is Chevron is offering. We will wait," acting oil and gas director general at the Energy and Mines Ministry Ego Syahrial said.

A second senior government official confirmed that Chevron was in talks with Eni over the IDD project, and a third unnamed upstream investor was also involved in discussions.

A Chevron spokesman said it does not comment on commercial discussions as a matter of long-standing policy, and Eni acknowledged the query but didn't provide an immediate confirmation.

The IDD project includes the production sharing contracts for the Ganal and Rapak blocks in offshore Indonesia, and the gas fields of Bangka and Gehem-Gendalo.

Chevron has a 62% interest in the Bangka field and a 63% stake in Gendalo-Gehem, according to its website. The other partners in the gas fields are Eni, Tiptop Energy and Sinopec.

In January, Chevron said it had opened a data room to facilitate discussions about the potential sale of its interest in IDD but no final decision had been made to sell its interest. It said Bangka, which began production in August 2016 as the first phase of IDD, was not able to compete for capital in Chevron's global portfolio.

Indonesian energy ministry's Syahrial said the IDD development and Rokan block were actually "one package."

The Indonesian government had appointed Pertamina to take over the Rokan block in central Sumatra from Chevron when the contract expires in August 2021, citing a more attractive development proposal from the national oil company. The Rokan issue had only served to exacerbate concerns of resource nationalism.

The IDD project is expected to contain of 2.3 Tcf of gas. Upstream regulator SKK Migas expects the second phase of IDD to be on stream in the fourth quarter of 2026; and peak production is expected to reach 844 million cu ft/d of natural gas and 27,000 b/d of crude oil.