Development of Cepu oil block might be delayed until 2007

Pertamina and ExxonMobil Indonesia might delay the development of the Cepu oil block until 2007 due to difficulties to procure rigs to carry out drilling activities in the oil block, Investor Daily reported Thursday.

"The lack of rigs will pose a problem in commencing the drilling activities. If there are enough rig supply we will be able to begin drilling activities in September, this year. If not, we have to delay the drilling works until early 2007," Pertamina's Vice President Iin Arifin Takhyan said Wednesday.

Iin said that Pertamina and Exxon planned to carry out drilling activities on 10 wells in 2007 as part of the development plan for the Cepu oil block. "In 2008, we will drill more wells," he added, saying that the two companies were recalculating the actual oil reserves in the Cepu oil block.

The Cepu oil block has estimated oil reserves of about 600 million barrels, mostly located in Banyu Urip, Kemuning, Jambaran, Alas Tua, and Cendana fields. The Banyu Urip field has the largest oil deposit which is estimated to reach 350 million barrels.

Director of Pertamina's EP Cepu estimated that the drilling cost in the Banyu Urip field would reach about US$5 million per well.The Cepu oil block is expected to be able to produce between 165,000 and 170,000 barrels per day during its peak production at the end of 2008. (*)