Government to assign 10% interest in AAL project to local firm

By Romel S. Gurky

ASX-listed AWE Limited said on Monday that the Indonesian government has recently advised it will exercise its right to assign 10 percent participating interest in Ande Ande Lumut (AAL) project in the Northwest Natuna PSC, in Natuna Sea, to a local entity in 2018.

?This is normal under Indonesian PSC terms and is a positive sign of Indonesian government support for the project,? said AWE, which owns 50 percent interest in Northwest Natuna PSC, while the balance is held by ASX-listed Santos Ltd as operator.

AWE said the 10 percent interest will require each of the PSC contractors to relinquish 10 percent of their interest leaving each contractor with a 45 percent share, and carry the local entity?s development costs.

The new partner is obliged to repay AWE its share of the carry from production, the statement added.

Elsewhere, AWE said field development studies are ongoing with a focus on drilling and completions optimization for K sand and G sand resources. Minor updates to the FPSO processing infrastructure are under review to maximize comingled production from the two reservoirs.

The joint venture is preparing an application to jointly develop the G sand and K sand reservoirs from field startup. This may require an amendment to the approved Plan of Development prior to FID. Stage 2 commercial tenders remain on hold until this work is completed.

?We continued to work with the operator of AAL to integrate the G sand into the existing field development plan during the quarter, and we are encouraged by recent improvement in the oil price,? AWE said.

Editing by Reiner Simanjuntak