Upstream petroleum economic analysis under low price on offshore field development.

Indonesia is projected to still have abundant potential oil and gas reserves in deep-offshore areas, which require advanced technology and large capital investments to start production. The high cost of production, coupled with the continued volatility of crude prices, and the deferment of cost recovery as an impact of declining revenues from field development projects are inevitable problems on oil and gas management. This study will evaluate the impact of current fiscal on deep-offshore project development and estimates the limit of gas price, reserves and expense, with the aim of obtaining an optimal scheme that will encourage new deep-offshore field development. The approach used in this study is based on deterministic discounted cash flow modelling, and takes into account the uncertainty condition using a Monte Carlo simulation process. The study found that a field and development cost of 20$/bbl suggests new deep-offshore developments will not be economically attractive without cost efficiency improvements and fiscal incentives. It also suggests that sharing facilities with other nearest working area is expected be able to reduce the development and operating costs. [ABSTRACT FROM AUTHOR]