Financial Feasibility Study of Carbon Capture, Utilization, and Storage Project in West Java, Indonesia

Following The Paris Agreement, Indonesia submitted an Enhanced Nationally Determined Contribution with an emission reduction target of 31,89% unconditionally or 43,20% conditionally. Indonesia envisions to reach net zero emission by 2060 or sooner. Contributing approximately a third of the carbon emission nationally, the decarbonization of the energy sector plays a big role in the ENDC pathways. From the oil and gas subsector, one of the programs designated to reduce their greenhouse gas emission are CCS (Carbon Capture and Storage) and CCUS (Carbon Capture, Utilization, and Storage). In oil and gas upstream industry, CCUS is a combination of technologies that involves sequestering carbon dioxide (CO2) from oil and gas upstream activities, utilize it as an enhanced oil recovery to increase liquid production before storing it permanently underground. However, the development of CCUS is filled with challenges. Other than the technical challenge of CCUS, the project is deemed to be too expensive and unable to generate a positive return for the project owner. Carbon trading is one of the mechanisms intended to provide added revenue for CCUS project. Using the carbon offset and trade mechanism, entities that conduct emission-reducing activities receive credit for the amount of emission reduced. The carbon credits can be sold in the market to other companies that need it. This research aims to determine whether carbon trading could increase the profitability of a CCUS project owned by an oil and gas company located in West Java, Indonesia. The project consists of capturing CO2 generated from natural gas purification, transporting it via pipeline to a nearby depleted oil field where the CO2 is used as an enhanced oil recovery, and storing it permanently underground.