Govt asks Total to cut Mahakam production

By Febry Silaban

French firm Total EP Indonesie (TEPI) has substantially curtailed the gas production of the Mahakam block in East Kalimantan at the request from the government because the level of inventory is high at the Badak LNG plant in Bontang, according to industrial sources

Now, Mahakam block, which normally produces 1.7 billion cubic feet per day (bcfd) of gas, has had its gas production curtailed by 577 million cubic feet per day (mmscfd). The block?s condensate output, which normally reaches 69,000 barrels per day (bpd) has been cut by 17,000 bpd.

?All wells in South Mahakam and Sisi-Nubi have to be shut-in due to the high inventory levels at Badak LNG plant since Friday, Sept. 19, 2014,? the source told Petromindo.com.

High inventory levels usually occur because the lack of buying.

Another source noted however Total has been forced to curtail production due ?administrative reason?, meaning the firm has yet to obtain permits from the government to sell the gas from Mahakam.

"There are four cargoes of LNG (processed out of gas from Mahakam which are ready to be delivered to customers). Why has only one cargo got permit to be delivered to costumer? Why has the government not issued permits to sell three other cargoes?" The source said, adding that there buyers of the LNG, which are all overseas, have been fixed

"Total has been working hard and made a good production. Unfortunately, it received a letter from the government insructing it to curtail production?" the source said.

Editing by Johannes Simbolon