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Jakarta Post

Selat Panjang oil and gas block to begin production in 2021

  • Norman Harsono
    Norman Harsono

    The Jakarta Post

Jakarta   /   Wed, October 16, 2019   /   12:30 pm
 Selat Panjang oil and gas block to begin production in 2021

The Energy and Mineral Resources Ministry signed on Monday a 20-year contract with oil and gas companies Zamatra Bakau Straits and Sumatra Global Energi to exploit the Selat Panjang block in Riau province.

Zamatra Bakau Straits president director William J. Harpe said the companies expected to begin production within two years. The company, a subsidiary of Canadian Sonoro Energy, holds a 75 percent participation interest in the block. Sumatra Global Energi is an affiliate of Indonesian company Menara Global Energi and holds the remaining 25 percent interest.

The ministry said in a statement the companies were set to invest US$74 million in drilling six exploration wells around the block for the first five years. They are also to pay a $5 million signature bonus, which is a form of non-tax state revenue.

“With today’s signing ceremony, we have a total of five [oil and gas] blocks signed off using gross split schemes for the year 2019,” said ministry spokesman Agung Pribadi.

Since 2017, the ministry required the use of gross split schemes over cost recovery schemes for either new or extended production sharing contracts. The former scheme involves less red tape than the latter.