Indonesia Extends Production Sharing Contracts for 4 Oil, Gas Blocks

The Indonesian government has extended four production sharing contracts for oil and gas blocks held my Medco Energi International, Camar Resources and Husky Energy for another 20 years, a senior government official said late Thursday.

 The contracts cover the Bawean block offshore East Java; the Madura Strait block; the South Sumatra block and Block A in Nanggroe Aceh Darussalam.

 Medco Energi International, Camar Resources and Canadian Husky will totally invest $4.58 billion in the next 20 years to develop ther blocks and the contract extension will boost Indonesia's production by 174 million barrels of oil and 1.78 trillion cubic feet of gas over that period, oil and gas director general at the energy and mines ministry Evita Legowo said.

"The blocks contain 321 million barrels of oil and 2.4 Tcf of proven gas reserves," Legowo said.

 The Bawean block, whose contract expires in 2012, is operated by Medco subsidiary Camar Resources, which plans to spend $1.239 billion over the extension, according to Legowo. The Bawean block now produces about 800-1,000 b/d.

The Madura Strait block, whose contract expires in 2012, is operated by Husky Energy. The company is committed to invest $642 million over the extension.

The block, which is still being developed, is expected to see initial production by 2013-2014 at 100,000 Mcf/day and 600 b/d of condensate.

The contracts for the South Sumatra block  and Block A in Nanggroe Aceh Darussalam, which are operated by Medco E&P Indonesia, are set to expire in 2013 and 2011, respectively. The company has committed to invest $1.411 billion and $1.291 billion, respectively, according to Legowo.

 Production figures for the South Sumatra block were not available. ButMedco expects Block A to be on stream by Q2 2013 at 60,000 Mcf/day and ramp up to 110,000 Mcf/day within the year.

 Indonesia has seen its crude output fall because of natural decline at fields. It has set a target to produce 965,000 b/d of crude and condensate this year as well as 7.56 Bcf/d of gas. 

Anita Nugraha
Platts