Exploration activity in Indonesia rising

Feb 27, 1997 01:00 AM

Indonesia's state oil company Pertamina said it sees increasing oil exploration in 1997 and pledged to give case-by-case incentives to contractors in bid to maintain production levels. "Exploration activities increased in 1996. I believe the trend is that those activities will continue to increase in 1997," Pertamina's director of exploration, Priyambodo Mulyosudirdjo, told. He said Pertamina would give case-by-case incentives to oil contractors if the justification was strong in order to maintain Indonesia's production levels.
Caltex Pacific Indonesia President Baihaki Hakim said Pertamina had agreed to its proposal for a financial incentive to develop the Minas light oil steamflooding project. The project is expected to recover around 300 to 400 mmb from Minas crude oil reserves. Hakim said the project was very risky and needed investment totalling some $ 630 mm. "The incentive is in the form of interest recovery for the Minas light oil steamflooding project. This is a case-by-case incentive where we are allowed to charge the interest on our loans as an operating cost," Hakim said. He said under the current rules Caltex could not charge to Pertamina the interest on loans.
Another Pertamina official said that oil contractors would spend $ 1.03 bn on exploration in 1997, compared with $ 586.7 mm in 1996. Total spending by oil contractors is expected to rise to $ 5.34 bn from $ 4.21 bn in 1996. This includes exploration, production, development and administration.
Mulyosudirdjo said he expected exploration to increase with 178 exploration wells drilled this year, compared with 100 wells in 1996 and 75 wells in 1995. He said 16 wells were drilled in eastern Indonesia last year compared with 5 wells in 1995, while 84 wells were sunk in Western Indonesia against 70 in 1995. Mulyosudirdjo said production wells were 852 in 1996, compared with 534 in 1995. He said Indonesia produced about 1.57 million barrels per day of crude oil and condensate in 1996, compared with 1.59 million bpd in 1995. He said Pertamina offered 18 areas for direct negotiation for production sharing contract (PSCs) standard in 1997. The areas include offshore of Natuna in the South China Sea, offshore of South Sulawesi, East Kalimantan and Irian Jaya. He also said three areas were offered for tender for PSCs in 1997 in offshore of Madura in East Java and Irian Jaya as well as onshore of South Sumatra. Mulyosudirdjo said the Pertamina has concluded negotiations on seven contracts, including four PSCs. Eight contracts were under negotiation and eight would soon begin talks. Pertamina signed 15 oil contracts in 1996 and he expects to sign between 10 to 20 contracts in 1997.

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