PetroChina chairman Gong Bencai said the investment would support the operation of existing blocks, including the Jabung block in Jambi, the Tuban block in East Java and Selat Panjang in Riau.

In addition to maintaining the production of the blocks, it would also be used to drill 16 new wells and finance the workovers of 17 active wells.

“For the past two years, we generally put an investment of around $300 million annually. It’s safe to say that at least $300 million will be invested to support the operation of our current blocks,” Bencai told reporters in a press briefing on Wednesday.

PetroChina, a subsidiary of China’s state-owned petroleum giant China National Petroleum Corporation, began operation in Indonesia in 2002. Indonesia was PetroChina’s destination for its first overseas project.

PetroChina has already poured more than $5 billion in investment into the country and claimed to have paid $3 billion in taxes.

In total, it produces about 100,000 barrels of oil equivalent per day (boepd). Of the figure, the Jabung block, its largest operating block, generates 55,000 boepd.

The company expected output from the Jabung block to increase by 5,000 boepd year-on-year (yoy) to 60,000 boepd this year, Bencai said.

He said he hoped 2018 would be the harvest year for PetroChina because a number of wells drilled last year would begin their production.

“We call 2017 an effort year, while 2018 is a harvest year and 2019 a take-off year,” Bencai said.

With such planning, PetroChina would be able to “move forward at high speed” in 2020 and bring in around 80,000 barrels of oil per day (bopd) and around 600 million standard cubic feet per day (mmscfd) of gas.

Besides exploring new wells, the company will also reactivate a number of small blocks that have been abandoned because of their economic unviability, such as the Bangko block in Jambi.

“Under the new management, we will restart work on the Bangko block this year,” said Jabung’s general manager Yu Guoyi.

PetroChina expects to produce about 600 bopd from four old workover wells, and 5 to 10 mmscfd of gas.

Bencai added that PetroChina also intended to join the East Natuna project along with state-owned oil and gas company Pertamina following the withdrawal of United States oil giant ExxonMobil from the gas block last year.

“We actually have new technology in our research center, which can be used for the East Natuna block. As for this year, we will conduct a technology test on our Jabung Block, and we expect to see the results in the next few years,” he said.

In response to the implementation of the new production-sharing contract program, namely the gross-split program, PetroChina said it was quite enticing for investors given the tax relaxation and the flexibility for companies to make decisions on their own.

“However, I hope the Indonesian government will improve the licensing process as it can take a year to obtain approval for one well,” said Bencai.

Under the gross-split scheme, oil and gas contractors will get a tax waiver during exploration stage, while also seeing operational costs of the exploration deducted from their income tax. (fny)

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