State-owned energy giant Pertamina, through its subsidiary PT Pertamina. EP Cepu (PEPC), commenced on Monday the development of the Jambaran-Tiung Biru (JTB) field in Bojonegoro East Java with an estimated investment of US$1.54 billion. The project began after Pertamina agreed with its buyer, state-ovvned electricity firm PLN, the price for gas the latter will receive at its plant in Gresik, East Java, among other issues.
PEPC has appointed state-owned construction company PT Rekayasa Industri (Rekind) and its counterpart PT JGC Indonesia, the local unit of Japan-based engineering firm JGC Corp., to build the JTB field, which holds 2.5 trillion cubic feet (tcf) in gas reserves. It is slated to begin production in 2021.
Once operational, the field will be able to generate 172 million standard cubic feet per day (mmscfd) of gas Wwithin a period of 16 years. Pertamina will sell 100 mmscfd of the total gas output to PLN with a price of $7.6 per million British thermal units (mmbtu). The rest will be allocated to support industrialactivities around the JTB field.
The gas from the field is scheduled to be transported through pipelines from Gresik to Central Java’s capital Semarang, which is being built by another Pertamina subsidiary, PT Pertamina Gas (Pertagas), with an investment worth $515.7 million. The facility, set for completion by mid2018, will be able to transmit 500 mmscfd of gas to industrial firms across seven cities in Central and East Java provinces.
“This way, the utilization of gas can be expanded, while several delayed projects can resume to drive the economy of Central and East Java,” Pertamina president director Elia Massa Manik said in astatement. The project would bring $3.61 billion in state revenues until the project ends in 2035, head of Up-stream Oil and Gas Regulatory Special Task Force (SKK Migas), Amien Sunaryadi, said in a separate statement.
Earlier, SKKMigas said the construction ofthe field was over-priced and consequently, ordered an audit, which resulted in the current investment value. At present, Pertamina indirectly controls 49.4 percent in the JTB field, part of the Cepu Block that lies between Central and East Java. Meanwhile, United States oil giant ExxonMobil and a local government-owned enterprise (BUMD) hold 41.4 percent stake and 9.2 percent stake, respectively.
The Energy and Mineral Resources Ministry has mandated Pertamina to take over ExxonMobil’s shares valued at an estimated $121 million. Separately, on the same day, Pertamina’s subsidiary PT Pertamina Hulu Energi (PHE) also began to develop a new gas field, SP gas field, in the Offshore Northwest Java (ONWJ) block that spans from the north of Cirebon, West Java to Thousand Islands, Jakarta.
PHE has earmarked $92.7 million to build infrastructure as well as drill three development wells at the field, which may produce 30 mmscfd of gas starting from 2018.
“This shows our commitment to boosting national oil and gas production,” PHE president director R. Gunung Sardjono said in a statement.
The ONWJ block was taken over by PHE earlier this year and it is the first block to be operated under the new gross-split scheme, which requires oil and gas contractors to pay exploration and exploitation costs on their own in exchange for a higher profit split. The firm previously struggled to mn the block under the new scheme due to its economic infeasibility.
However, Gunung confirmed in August that the Energy and Mineral Resources Ministry had approved its proposal to increase the companys portion of production output to 73.5 percent for oil fields and 81 percent for gas fields, from the earlier agreement of 57.5 percent and 62.5 percent, respectively. As of July the ONWJ block produced 33,000 barrels of oil per day (bopd) and 126.8 mmscfd of gas.
Jakarta Post, Page-19, Tuesday, Sept 26, 2017
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