TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Total to spend big for offshore gas development
President Susilo Bambang Yu-dhoyono officially launched on Monday an offshore gas project developed by Total E&P Indonesie in Kutai Kartanegara, East Kalimantan, despite uncertainty over the companyâs contract extension
Change Size
P
resident Susilo Bambang Yu-dhoyono officially launched on Monday an offshore gas project developed by Total E&P Indonesie in Kutai Kartanegara, East Kalimantan, despite uncertainty over the company's contract extension.
Yudhoyono, due to leave office on Oct. 20, inaugurated the US$1 billion project, known as Sisi Nubi Phase 2B, which will see the installment of two new wellhead platforms ' WPS2 in Sisi field and WPN3 in Nubi field.
The Sisi Nubi 2B is designed to have a production capacity of 350 million standard cubic feet per day (mmscfd), with around 70 percent of the gas allocated for export and the remaining 30 percent for domestic consumption by companies including PT Pupuk Kaltim, PT Nusantara Regas and PT Citigas Bontang.
The project is part of the development of the gas-rich Mahakam block, but Total has yet to obtain a guarantee of the extension of its contract to develop the block after 2017.
The Upstream Oil and Gas Regulatory Task Force (SKKMigas)'s deputy for planning, Aussie Gautama, said that Mahakam had enough gas reserves to continue producing until 2032.
'There is still a significant amount [of gas] in Mahakam. If I'm not mistaken, it can last until 2032, but at a lower rate than now,' Aussie said after the project's inauguration.
Aussie said that SKKMigas had recommended an immediate contract extension confirmation as the agency had submitted its recommendations to the government at the end of 2012.
'We urge that a decision be made as soon as possible as it will provide the company with certainty regarding its investments,' Aussie said.
He explained that the reason that a decision regarding the contract had not yet been reached was because the government was considering factors other than the primary economic and technical recommendations that SKKMigas had made.
'Whatever the decision, Total needs to make its own calculations regarding the economic impact. From there they'll decide on how they can invest,' Aussie said.
'In any case, the operation can't be handed over as easily as in a relay race. They [Total] have shown good will by continuing their investment, but now they are slipping into uncertainty.'
An oil and gas contractor is allowed to submit a proposal for a contract extension 10 years before it expires. However, the government has yet to decide whether it will grant an extension or terminate the contract.
The recent termination of the Siak block contract that was held by PT Chevron Pacific Indonesia, which was announced on the day it expired, has been criticized.
Total E&P Indonesie president director Hardy Pramono said that the company remained committed to seeing out its contract.
'The Sisi Nubi 2B project demonstrates Total's commitment to contributing to the country's energy demands until 2017,' Hardy said.
In the case of a contract termination, Hardy proposed that the solution was to instate a transition phase to safeguard production levels from falling and to continue to supply gas to domestic and international buyers alike.
'The sooner that a decision is made, the better,' he concluded, adding that Total's project raised around Rp 61 trillion ($5.25 billion) in revenue for the state in 2013.
