$4 billion Muara Bakau project kicked off

Upstream authority SKK Migas said the development of two fields in Muara Bakau PSC operated by Italian firm Eni Spa can now begin as the winners of the EPCI (Engineering, Procurement, Construction and Installation) contract of the project have been selected.

The two fields are Jangkrik and Jangkrik North East.

?As the winners of the EPCI contract for the two fields have been selected, the US$4,136 million project can be started,? SKK Migas?s Interim Chairman J. Widjonarko said in a statement on Tuesday.

In tandem with the development of the project, 11 wells will be drilled.

The two fields will start production in 2017. At peak production which will last six years, they will produce a combined 450 mmscfd of gas. As is the case with all oil and gas fields, the fields? production will naturally decline. The fields are projected to have a production period of 14 years, Widjonarko said.

Under the Plan of Development, 70 percent of the gas in the form of LNG will be exported, with the remaining 30 percent for the domestic market to meet the gas needs of power plants and industries in East Kalimantan, Java, South Sumatra, central Sumatra, North Sumatra and Aceh. Nevertheless, SKK Migas and Eni have agreed to raise the domestic market portion to 47 percent ?as long as it is line with the scale of economy and is supported by gas infrastructure,? Widjonarko said.

The project is expected to generate $5 billion in state income.

The project has a strategic value as the fields are the first deepwater ones to be discovered in Indonesia. They were discovered at the dept of more than 500 meters above sea level. The discovery indicates the huge potentials of Indonesian deepwater areas which largely remain untapped.

The PODs of Jangkrik and Jangkrik North East were approved in November 2011 and January 2013 respectively.

The tender for the EPCI-1 contract to develop and install Floating Production Unit (FPU) barge attracted bids from 24 companies. The winner is the consortium of PT Saipem Indonesia, PT Tripatra Engineering and Construction, PT Chiyoda International Indonesia and Hyundai Heavy Industries Co. Ltd.

The tender for the EPCI-2 contract to develop onshore intake facilities, pipeline network and other supporting facilities drew bids from 18 companies. The winner is the consortium of Technip Indonesia and Technip Geoproduction (M) Sdn. Bhd. Meanwhile, the tender for Engineering Procurement-3 contract to develop underwater production system, control system and supporting facilities drew bids from 18 companies. The winner is PT FMC Santana Petroleum Equipment Indonesia.

Editing by Johannes Simbolon