West Madura offshore output sees first increase in years

Amahl S. Azwar, The Jakarta Post, Jakarta | Headlines | Mon, March 18 2013, 9:51 AM

The West Madura offshore oil and gas block, located off East Java and operated by Pertamina Hulu Energi (PHE), has seen its first output increase in years after the Indonesian contractor took over the operation of the block from South Korea’s Kodeco Energy in 2011.

Ali Mundakir, a spokesman from PHE’s mother company, state-backed oil and gas firm PT Pertamina, said on Sunday that the block’s output had increased by 6,700 barrels per day (bpd) of crude oil following initial production from two new wells last week.

The additional output has increased PHE’s West Madura block whole production to around 13,600 bpd of crude oil as of this week, according to the company’s data. Previously, the block had 10 existing production wells.

In addition, the new two wells also produced more than 5 million metric standard cubic feet per day (mmscfd) of natural gas, making the total gas output from the block increase to 121 mmscfd.

“The pipe installations for the two new oil fields at the block, namely PHE KE-38B and KE-38A, have been delayed following heavy rains and high waves during this January and February,” Ali said in a statement.

“We finally managed to finish the installation process on March 11 and reached the first production of 5,400 bpd from the new wells two days later, which has increased to 6,700 bpd,” he said.

PHE is struggling to meet expectations from the country’s regulator as it has yet to achieve its oil
production target after taking over the offshore block, located 112.6 kilometers off the coast of Bangkalan, Madura in East Java, from Kodeco in May 2011.

Currently, PHE holds an 80 percent stake in the block while the remaining 20 percent is owned by the South Korean contractor.

Under Kodeco’s operation from 1981 to 2011, production at the West Madura block topped 26,000 bpd of oil and 170 mmscfd of natural gas.

Production has been falling, however, at a declining rate of 50 percent per year as Kodeco has been unwilling to pour new investment into the block amid contract extension uncertainties.

The government declined to extend the South Korean company’s contract in the days before it expired.

Separately, the upstream oil and gas regulatory special task force SKKMigas operations deputy Muliawan said that prior to the latest output increase, the West Madura block’s production had declined
and at one point had reached a nadir of 6,000 bpd.

“Pertamina’s massive activities at the block have started to show positive results. We hope that it manages to meet the government’s target of 22,000 bpd of crude oil by the end of this year,” he said.

PHE had previously received approval to invest US$1 billion to develop the offshore block by the regulator.

This year, the firm aims to drill 20 new exploration wells to boost production.

SKKMigas earlier this year predicted that without new projects, average daily production might reach a nadir of 803,000 bpd this year.

The government is relying on several projects, such as the West Madura offshore oil and gas block as well as France-based Total E&P Indonesie’s South Mahakam block in East Kalimantan, to contribute 27,000 bpd to this year’s production.



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