EMP confirms new production split for Kangean block

Publicly listed oil company PT Energi Mega Persada (EMP) confirmed on Wednesday that the government will implement a new production split for the Kangean oil and gas block under a recently extended new contract.

The government extended EMP's production sharing contract (PSC) on the Kangean block for another 20 years, starting November 2010.

EMP said in a statement to the Jakarta Stock Exchange that under the extended PSC, the government will obtain a higher gas output split of 72.50 percent, while the remainder will go to the contractor. Under the existing contract, the government only obtains 70 percent of the Kangean block gas output. Meanwhile, the production split for oil remains unchanged at 85:15 percent, with the largest portion going to the government.

EMP said that the government decided to increase the tax rate from 44 percent to 56 percent for the current contract, but will apply the previous tax rate of 44 percent for the extended contract.

EMP is the operator of the PSC with 100 percent interest.

The Kangean block, which is located offshore East Java, covers the Pagerungan gas field, Terang Sirasun and Batur fields. The Pagerungan field is currently producing 110 million cubic feet of gas per day and 1,000 barrels of condensate per day.

Earlier, the government said it would implement the same policy for extension contract of three PSCs (Wiriagar, Berau, Muturi) in Papua that will supply natural gas to Tangguh project. (Robert)