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.
Pertamina opens up new oil and gas well despite low oil prices
Pertamina Hulu Mahakam (PHM), a subsidiary of state-owned oil and gas company Pertamina, is opening up a new oil and gas field in the country to find new reserves despite a sharp fall in crude oil prices
Change Size
P
ertamina Hulu Mahakam (PHM), a subsidiary of state-owned oil and gas company Pertamina, is opening up a new oil and gas field in the country to find new reserves despite a sharp fall in crude oil prices.
PHM began on May 21 drilling a new oil and gas exploration well in the Peciko Field, Mahakam Block, which is located off the coast of East Kalimantan, said the company in a statement on Monday.
The company expects to finish drilling the well, which will be up to 2,700 meters deep beneath the sea surface, within 90 days.
“This is part of our effort to discover new reserves in maintaining operation and production levels in the Mahakam Block,” wrote the company in a statement.
PHM did not mention how much oil and gas it expected from the new well. However, PHM yielded 153,477 barrels of oil equivalent per day (boepd) last year, becoming Indonesia’s third-most-productive oil and gas company in 2019.
Oil and gas reserves in the Mahakam Block are confined to thousands of small, isolated, underground pockets, which means PHM has to continually drill new wells in existing reserves, on top of drilling for new reserves, in maintaining production levels. The company drilled 127 wells last year.
Furthermore, as a national oil company (NOC), Pertamina is obligated to uphold Indonesia’s upstream oil and gas industry in the name of domestic energy security even when less profitable, Pertamina president director Nicke Widyawati told lawmakers on April 4.
“Most NOCs consistently spent between 12 and 35 percent of their upstream budget on exploration,” said senior energy analyst Huong Tra Ho of consultancy Wood Mackenzie in a statement dated May 20.
“This is significantly higher than the majors’ [private oil companies] average spending of 8 percent of the upstream budget on exploration.”
Reported earlier, Pertamina has agreed to join forces with state construction firm PT Nindya Karya and a South Korean consortium to explore business opportunities for a US$1.5 billion refinery development project in Dumai, Riau.
The memorandum of understanding (MoU) signed by representatives of the three parties on May 20 marked progress in Pertamina’s plan to develop its major refineries as Indonesia works toward reducing oil imports and increasing domestic oil production.
“This $1.5 billion project would increase the domestic oil and fuel production capacity, which would consequently reduce our dependence on oil imports and trade deficits in the future,” Investment Coordinating Board (BKPM) chairman Bahlil Lahadalia said during the signing ceremony.
The MoU, which commissions a joint study on the Dumai refinery upgrade project, was signed by Pertamina megaprojects director Ignatius Tallulembang, Nindya Karya president director Haedar Karim and a representative of the South Korean consortium, DH Global Holdings Co. Ltd. chairman Jung Sam Seung.
The refinery upgrade is part of Pertamina’s Refinery Development Master Plan (RDMP) and Grass Root Refinery program.
The RDMP lays out a road map for upgrading four refineries: one in Dumai, Riau, one in Balikpapan, East Kalimantan, one in Cilacap, Central Java, and one in Balongan, West Java. The Grass Root Refinery program details the company’s plans to construct two new production facilities in Tuban, East Java, and Bontang, East Kalimantan.
The upgraded refineries’ total installed capacity will increase 38.2 percent to 1.21 billion barrels per day (bpd), while the new refineries will have a combined capacity of 600,000 bpd.
“We would like to express our gratitude to all parties who agreed to actualize the initiative. I hope the investment will have additional strategic value, as the oil price is currently under pressure,” Bahlil said.
Pertamina, through Ignatius, stated that the Dumai refinery upgrade project was prioritized.
“With this agreement, Nindya Karya and the South Korean consortium have become Pertamina’s strategic partners in conducting the study on the Dumai refinery upgrade. Our company hopes an important milestone can be achieved in December,” Ignatius said.
— Mardika Parama contributed to this story.
