Govt keeps Aceh Block A split unchanged

Director General of Oil and Gas Evita Legowo said on Tuesday that the government has finally decided to keep gas production split from Medco-operated Block A PSC in Aceh unchanged at 65: 35 in favor of government and would issue the block?s contract extension next week.

Evita said the government?s decision had been agreed by the block?s operator Medco EP.

She did not disclose the length of the block?s extension, but according to Petromindo.Com data, Medco was filing for 20 years extension. Current contract would expire in 2011.

Minister of Energi and Mineral Resources Purnomo Yusgiantoro said in October that earlier government had agreed to reduce its split from 70 percent to 51 percent, to give Medco and its partners in the Block A PSC adequate return on investment to exploit the block, which gas have high sulfur and CO2 content.

Upstream oil and gas authority BPMIGAS, however, advised the government that in the light of high gas price split of 35 percent for is already attractive for the PSC participants to exploit the block.

Medco and partners will spend US$600 million to develop the block and would supply 110 MMCFD of gas to PIM for 7 years starting 2010. Another 15 MMCFD of gas from the block would be supplied to state electricity firm PLN.

The gas will be delivered from 3 fields namely Alur Rambong field, Julu Rayeu field and Alur Siwah field, through a 100 km pipeline from Block A.

The block is expected to start production in 2010.

The block is operated by Medco with a 41.67 percent interest. Other participants are Japex (16.67 percent) and Premier Oil (41.67 percent). (denny)