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Jakarta Post

PHE West Madura offshore block to miss its 2013 target

  • Amahl S. Azwar

    The Jakarta Post

Jakarta   /   Sat, September 28, 2013   /  02:02 pm

Indonesia'€™s state-owned energy firm PT Pertamina, the country'€™s second-largest oil producer, will likely miss the output target for its West Madura offshore (WMO) block at the end 2013, an executive has said.

Bambang Kardono, the general manager of Pertamina Hulu Energi (PHE) WMO, the energy giant'€™s operation arm for offshore assets, said in Jakarta on Friday the firm would likely see the WMO daily average oil output reach 18,700 barrels per day (bpd) by the end of this year.

The estimation was 10 percent lower than this year'€™s earlier target of 20,700 bpd of crude oil as stipulated in the firm'€™s work plan and budget (WP&B).

'€œIt will be very difficult for us to reach this year'€™s WP&B target because the gap [of real production earlier this year] is still high,'€ he said at a press briefing.

In the January-September period of 2013, the average daily crude oil output from the WMO block has reached 16,010 bpd, still lower by 12 percent than the firm'€™s year-end estimation.

As for natural gas production from the WMO block, Pertamina was more optimistic as the January-September period saw an average gas output reach 112.59 million meter standard cubic feet per day (mmscfd), still close to the year-end target of 113.9 mmscfd.

PHE WMO holds an 80 percent stake in the WMO block, which is located 112.6 kilometers off the coast of Bangkalan on Madura Island in East Java, while the remaining 20 percent is owned by the South Korean contractor Kodeco, which previously operated the block.

Under Kodeco'€™s operation from 1981 to 2011, production at the block topped 26,000 bpd of oil and 170 mmscfd of natural gas.

Production has been falling, however, at a declining rate of 50 percent per year as Kodeco has been unwilling to pour new investment into the block amid contract extension uncertainties a few years before it expired.

The government declined to extend the South Korean company'€™s contract in the days before it expired in May 2011. The current concession will end in May 2031.

Pertamina'€™s data shows the investment for the WMO block in 2012 jumped to US$598 million from $168 million a year earlier. The firm planned to spend $888 million this year to develop the block.

In 2014, the firm planned to build six additional platforms to help boost output for the WMO block in addition to drilling 10 additional wells.

The firm also planned to conduct more studies and to complete a 3D-seismic survey for the firm'€™s working areas in the Madura Strait by the end of this year.

'€œWe expect WMO oil production to reach 22,600 bpd in 2014 and 27,000 bpd in 2015, which will be the peak output from the block. We aim to beat the previous peak production of 26,000 bpd,'€ said Pertamina'€™s Bambang.

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