Total's Indonesia Unit Investing $2.5b to Stave Off Mahakam Block Decline

By : Retno Ayuningtyas | on 9:39 PM February 09, 2014
Category : Business, Corporate News

Jakarta. Total E&P Indonesie, a local unit of French oil major Total, has set aside $2.5 billion to develop the Mahakam oil and gas block in East Kalimantan and keep its production capacity on target.

“The amount of funds is about the same as last year’s,” said Kristanto Hartadi, the company’s head of media relations.

This year, Total E&P targeted production of an average 1,660 million standard cubic feet per day (MMSCFD) of natural gas from the Mahakam block, one of the biggest gas blocks in the country.

Last year the company produced 1,750 MMSCFD. The Mahakam block also produces some oil and condensates.

About $1.5 billion of the funds will be used for drilling and oil and gas facility development, while $300 million will go for well services.

The company will use the rest to fund other operation costs, including for seismic activities and general administration.

“We will also drill 116 development wells and more than 10,000 well service works,” Kristanto added.

Development wells are new wells drilled in a proven producing area.

Total E&P has been making efforts to maintain production volume from Mahakam amid the natural decline of production from aging wells. It has been developing three of its oil wells in the block — Sisi-Nubi 2B, Peciko 7B and South Mahakam 3 fields — to add production.

Sisi Nubi 2B and Peciko 7B are expected to start producing by the third quarter of this year.

Meanwhile, the South Mahakam 3 field is set to start drilling by the second semester next year. The platform is still under construction.

This field is expected to contribute about 80 MMSCFD of natural gas.

“Had we not planned these efforts, production could fall by 50 percent. With these efforts, we can minimize the decline at 10 percent,” Kristanto said.

“It is difficult to add more reserves in the Mahakam block as almost all areas there have been exploited,” said Arividia Noviyanto, a Total S&P vice president.

Total S&P forecasts production at the block could be below 1,500 MMSCFD in 2017.

Total S&P has been in the country since 1968 together with its Japanese partner Inpex, each of which hold a 50 percent interest in the Mahakam block.

Most of the gas produced is used to supply the Bontang liquefied natural gas plant in East Kalimantan.

Worldwide, Total produced about 1.87 billion cubic feet per day of natural gas and 67,000 barrels of oil per day in 2012, according to company figures.

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