Cepu block investment swells to Rp 35 trillion

Investment for the Cepu block may swell to Rp 35 trillion (about US$3.8 billion) from the initial estimate of Rp 25 trillion due to the rise in the procurement costs for exploration rigs and other supporting infrastructure facilities.

"The investment needs should be provided by the two operators and the four BUMDs (companies owned by local governments) proportionally according to their respective ownership," Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters following the signing of the agreement on the sales of the Cepu participating interest to the four BUMDs in Semarang, Friday.

Thus far, the block's operators have invested Rp 4 trillion in the block, he said.

With the signing of the share sales agreement, Purnomo hoped the operators would have no more problems in continuing the exploration activities in the Cepu block, which is located at the border of Central and East Java provinces.

The minister expected the four wells in the block's Banyu Urip field could soon begin to produce about 20,000 barrels per day (bpd) and the production could peak at 165,000 bpd by 2011.

He said that the operators would temporarily use a portable facility to process the crude production from the four wells.(godang)