Exspan sees oil production decline, increasing gas output

PT. Exspan Nusantara, a wholly owned subsidiary of Jakarta-listed PT Medco Energi International Tbk., expects its oil production would continue to fall in the next two years due to maturing fields, but sees gas production to continue rising.

?We see oil production will decline by around 10-15 percent annually, despite additional output from Matra Oil field in South Sumatra of around 3,000 barrels per day, which will commence in August this year. That?s due to natural production decline in our oil field,? said company director of operations Budi Basuki in an interview Thursday. Exspan currently produces 68,500 BPD, with Rimau block in South Sumatra contributes 52,000 BPD.

Budi said Exspan and parent company Medco were trying hard to bring new oil sources through exploration activities and acquisition of productive oil fields. Thus far, it had only been able to add some 2,500 barrels per day into its production from acquisition of interest in Tuban JOB in East Java.

Medco is setting aside US$250 million in fresh money to carry out new acquisition plans in a bid to boost oil, gas production. Medco is currently in talks to acquire oil, gas blocks in Indonesia.

Budi said that to offset dwindling oil production, Exspan planned to boost natural gas production from 87 million standard cubic feet per day (MMCFD) to 140 MMCFD next year.

?Exspan is actively looking to increase gas production, especially by increasing cooperation with state electricity company PLN to meet gas demand in South Sumatra and East Kalimantan for power generation,? said Budi.

?Finding oil in Indonesia is getting more and more difficult these days, therefore, Exspan considers the best strategy is to boost natural gas production,? said Budi.

Exspan is currently supplying natural gas to PLN and fertilizer maker PT. Pupuk Sriwijaya in South Sumatra, and to Bunyu Methanol plant in East Kalimantan.

Budi said in a bid to further increase gas production Exspan would commence development of Singa gas field in Lematang PSC in South Sumatra next year to enable the field to supply 50 MMCFD of gas to PLN starting late 2005. Budi said Exspan would invest between $70-80 million to develop the field in two years.

Exspan had also bagged gas supply agreement with PLN to supply natural gas from its East Kalimantan gas fields and South Sumatra with gross volume of around 220 MMCFD.

?If we want to achieve 10-15 percent annual growth as targeted by parent company, shifting to gas is inevitable,? he said.

Exspan currently operates 13 oil, gas blocks throughout Indonesia. (alex)