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T Pertamina EP Cepu (PEPC), a subsidiary of the country'€™s oil and gas giant PT Pertamina, will soon kick off the development of its Jambaran-Tiung Biru field following the completion of the Banyu Urip field.

PEPC president director Adriansyah said the company expected to break ground on the Jambaran-Tiung Biru gas field development as early as next year.

'€œWe already have an ongoing EPC [engineering, procurement, construction] tender this year and are expecting to award the winner next year. I'€™m expecting to start construction before the end of next year so that we can meet our target of going on-stream in 2019,'€ he said.

Adriansyah added that well drilling would begin only in 2017, when five wells in Jambaran would be drilled. '€œWe don'€™t want to spare too much time from drilling to on-stream because if the wells are abandoned, the costs will be too high for us,'€ he said.

PEPC is now the operator of the Jambaran and Tiung Biru gas fields located in Central Java.

The Jambaran field is located within the Cepu block, which is currently operated by ExxonMobil Indonesia'€™s unit ExxonMobil Cepu Limited (EMCL) that holds a 45 percent interest in the block.

PEPC holds another 45 percent of the Cepu block while the remaining 10 percent is owned by the Cepu Block Cooperation Bodies, which consist of locally owned companies run by the administrations of Blora regency, Bojonegoro regency, East Java province and Central Java province.

Meanwhile, Tiung Biru field is located inside Pertamina'€™s operation area adjacent to the Cepu block. PEPC and EMCL agreed to combine the two fields in September 2012.

The Cepu block, with its main field called Banyu Urip, is the backbone of national oil output. The project is currently in the commissioning stage and is expected to be completed by mid-December. As many as 130,000 barrels of oil per day (bopd) are expected from the field in the early production stage. The field is then expected to ramp up its production to a peak of 165,000 bopd by January next year.

Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) chief Amien Sunaryadi said earlier that the authority had dropped an initial plan to maintain the temporary production facilities at Banyu Urip field.

'€œConsidering various problems we have seen earlier, we will only extend the usage of the temporary facility by two weeks, which will be until January 15,'€ he said. The company previously said it would maintain the operation of the temporary production facilities in order to achieve a production level of 205,000 bpd next year.

Jambaran-Tiung Biru is estimated to be able to produce 185 million standard cubic feet per day (mmscfd) of gas. As much as 100 mmscfd will be allocated by Pertamina for electricity generation and the other 85 mmscfd will be used for the fertilizer industry, through Pupuk Kujang.

Adriansyah said the company had an agreement for the 100 mmscfd gas distribution. However, the other 85 mmscfd remains uncertain because related parties have yet to agree on a price.

'€œWe are still waiting for the government, which recently said that it aimed to reduce the gas price. Currently, we haven'€™t been approached by the authorities. Despite the issue, the show must go on; we will work on projects as long as there is a principle agreement,'€ he said.

Earlier, the government said that it expected to reduce gas prices by 30 percent so that industries could enjoy cheaper energy sources to run their plants and in turn help the country to improve its economy. Under the plan, the government is set to cut US$1 to $2 from its portion of gas revenue as well as regulate margins and fees for gas distribution.