Crude production resumes at Merangin II

By Bernard Loebs

Crude production from Merangin II block onshore South Sumatra has resumed on Sunday after Musi Rawas regency government allowed the block?s contractor PT Sele Raya to transport crude using public road, BPMIGAS Chairman R. Priyono said.

Production of some 1,300 barrels of oil per day from the block has been put to a halt since January 23, 2012 after the local administration issued a letter indefinitely banning the over-land transportion of crude from the block.

In the letter, Musi Rawas Regent Ridwan Mukti uniterally cancels an earlier agreement between operator and the local government on the utilization of public road to transport the crude oil.

?The local administration wants the crude to be transported through transmission pipes,? said Head of Public Affairs, Security and Formality Division at the upstream authority BPMIGAS Gde Pradnyana earlier.

Gde added that BPMIGAS and Sele Raya have in fact agreed to build the 180 km long pipeline network. ?But it will take several years, so that in the meantime the transport of crude was using trucks,? he said, adding that issues such as land acquisition, licenses and protected forest are making the development of the pipeline network difficult .

This production disruption is not the first time for Sele Raya. Last year from December 19 to December 23, 2011, a road in Lakitan subdistrict was blocked by a privately owned oil palm plantation which led to a reduction in production to the lowest level of 150 barrels of oil per day.

Editing by Alexander Ginting