Jakarta. State-owned energy company Pertamina plans to invest $237 million over the course of three years to develop the Sanga Sanga oil block in East Kalimantan, it announced on Wednesday (08/08).

Pertamina has just acquired the block from US-based Virginia Indonesia Company (VICO), which was operating it for four decades.

According to upstream oil and gas regulator SKK Migas, the Sanga Sanga oil block currently produces 10,753 barrels oil equivalent per day (boepd). The block, located in Kutai Kertanegara district, also produces 80.7 million metric standard cubic feet per day (mmscfd) of gas. It has an estimated cumulative production of 258 million barrels of oil equivalent (mmboe).

A senior Pertamina executive said the company will use this investment to increase production in the block by drilling 29 new wells next year.

Meidawati, upstream strategic planning, portfolio and evaluation senior vice president at Pertamina, said the block offers a great potential as Pertamina will maintain its production and also will search for new reserves.

"The Sanga Sanga block will be later integrated with the company's other blocks such as Pertamina EP and Mahakam, so in the end it would become cost effective for the company," Meidawati  said in a statement on Wednesday (08/08).

Sanga Sanga will be operated by Pertamina's subsidiary, Pertamina Hulu Sanga Sanga.

"As representatives of the government, we appreciate VICO Indonesia's contribution and hard work as Sanga Sanga oil block's operator. Pertamina is now preparing for the transfer and will continue its operations,"  SKK Migas head Amien Sunaryadi said.