Govt approves Chevron, Husky PoDs
Friday, May 2 2008 - 03:11 AM WIB
The Ministry?s release said that cost recovery interest incentive for West Seno would be revoked since the approval of the revised PoD and exploration costs since the end of the block?s exploration period in 2000, would no longer be recoverable.
The Ministry said the decision to revoke the incentives was due to low revenue to the state from West Seno. According to the release, West Seno has remaining recoverable reserves of 11.4 million barrels of oil and 120 BCF of gas.
The ministry said as per 2006, West Seno had swallowed up investment of US$600 million and another $300 million would be required to further develop the block. The government is expecting revenue of US$930 million from West Seno?s remaining reserves.
West Seno, the first Indonesian deepwater oil, gas project, started production in 2003. The project, which was built at huge costs, was considered as failure as it is producing oil and gas far below initially targeted level.
Gas production from West Seno is piped to Bontang LNG plant.
Meanwhile the Ministry said the government approved Husky Energy?s BD field PoD on condition it has to alter economic calculation when the Madura BD block contract is extended.
Government expects revenue of $1.5 billion from BD gas field based on gas price assumption of 4,41/MCF, condensate price of $57.75 per barrels, investment expenditure of $642 million, operating costs of $365 billion and sunk costs of $176 million.
The Madura BD Field is estimated by Husky to contain probable reserves of 93 billion cubic feet of natural gas and 6 million barrels of condensate in addition to contingent resources of 422 billion cubic feet of natural gas and 17 million barrels of condensate as at December 31, 2006.
When development of the field is completed, production is estimated at 100 to 110 million cubic feet per day of sales gas and 6,000 barrels per day of condensate. The natural gas will be processed through a floating production unit and will flow via a 60 kilometre pipeline for delivery onshore to East Java.
The gas will ultimately be sold by the above companies to fulfill their industrial customers' gas demand in the East Java area and the condensate will be shipped to markets in South East Asia by shuttle tanker. (alex)