Oil and gas firm Pertamina EP a subsidiary of state-owned energy giant Pertamina, has increased its capital expenditure for this year by nearly 50 percent to support its aggressive plan to develop new oil and gas blocks across the country.
Nanang Abdul Manaf, the company’s exploration and new discovery project director, said the company had allocated US$ 778 million in capital expenditure for 2017, up 46.2 percent compared to last year’s Figure.
At present, the company is working to get approval from the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) for its plans of development (POD) for five new blocks, namely the Bambu Besar and Akasia Bagus blocks in West Java, the Tapen block in Central Java, the Benggala block in North Sumatra and the Bunyu block in North Kalimantan.
“We expect that the‘POD for those five blocks can be approved by April so we can start develop- ing them the following month,” Nanang said on Wednesday.
The Bambu Besar, Akasia Bagus and Tapen blocks are projected to reach their peak production in 2018, while two others are slated for 2019. SKKMigas has recently granted Pertamina EP approval for the POD of the Jati Asri block in West Java. There are seven development wells at the block, each will need between $100 million and $150 million to finance, among other things, drilling activities and facility upgrades. Each well is expected to produce 500 barrels of oil per day (bopd).
“Most of our development plans are located in our Asset 3 areas [in West Java] Hence, we expect the production from those areas to increase to around 15,000 to 17,000 bopd from the current range of 9,500 to 10,000 bopd,” Nanang went on.
Moreover, gas production from such new wells is also aimed at meeting the growing demand for gas in West Java, which currently has a gas shortfall of around 71 million cubic feet ayear. In total, ‘Pertamina EP aims to undertake development drilling activities at 48 wells in 2017. lt expects to produce 85,000 bopd and 1,041 million standard cubic feet per day (mmscfd) of gas by year end, up slightly from the production of 83,674 bopd and 989 mmscfd last year.
The upward trend has been triggered by the recent surge in global oil prices. As a result, the Indonesian Crude Price (ICP) is expected to be at an average of $50 per barrel in 2017, up from $39 per barrel last year. Therefore, Pertamina EP is upbeat it can book $596 million in net profits throughout 2017, a slight increase from $590 million recorded last year.
The company is putting high hopes on its gas blocks in the areas of Asset 2 in South Sumatra, which have a production capacity of around 350 mmscfd of gas, and Asset 3 in West Java, which are able to produce around 250 mmscfd of gas, to be the backbone its financial success in 2017.
Moreover, Pertamina EP is currently speeding up the development of the Donggi and Matindok blocks in Central Sulawesi. The Donggi block has been on stream since April 2016 with a capacity of 50 mmscfd of gas, while the Matindok block is expected to be at its peak production of 55 mmscfd of gas in April this year. The development of these two blocks will cost Pertamina EP a total of $696.2 million. The firm also expects to see its Paku Gajah block in South Sumatra on stream starting from April, with an output capacity of 45 mmscfd of gas and 1,100 bopd of condensate.
“lf the oil price gets better from one day to another, we might be able to be more aggressive in our overall activities,” Nanang said. Following the Organization of Petroleum Exporting Countries’ (OPEC) decision to cut output by 1.2 million bopd in 2017, energy think-tank Wood Mackenzie has predicted that the annual crude price average will stand between $53 and $58 per barrel.
It may further increase to $60 to $65 per barrel by May if non-OPEC members meet their commitments to trim output by 558,000 bopd.
Jakarta Post, Page-15, Friday, March, 24, 2017
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