Malaysian firm to participate in South West Bukit Barisan block

By Romel S. Gurky

Kulim (Malaysia) Berhad announced on Monday that its wholly-owned subsidiary Kulim Energy Nusantara Sdn Bhd (KENSB) has agreed to participate in the exploration and development of South West Bukit Barisan (SWBB) block in central Sumatra.

The subsidiary entered into a joint operating agreement (JOA) on Oct. 24, 2014 with PT Radiant Bukit Barisan E&P (PT RBB) and PT Graha Sumber Berkah (PT GSB), under which PT RBB shall remain as the main operator PT GSB and KENSB shall become co-operators,

The co-operators are obliged to provide support to the operator to perform its obligations under the SWBB PSC, which was entered into on Nov. 13, 2008 between PT RBB, PC (SKR) International Ltd (PC SKR) and SKKMigas.

The support to be provided by the co-operators includes, amongst others financial support, in the form of capital or access to capital; technical support for operations; and human capital support for operations.

The Work Program and Budget (WP&B) for the block has been submitted by PT RBB to SKK Migas, pending for approval. Under the WP&B, operator is required to carry out the on-going work program, amongst others, geological and geophysical study, seismic study and exploration of existing and/or new well. The total cost for exploration activities in 2015-2018 is estimated at US$53.65 million.

The JOA also says KENSB is entitled to 60 percent of the net profit from the project, while the remaining balance shall be for the other parties, subject to provisions in the SWBB PSC and prevailing tax applicable to each party.

The JOA is conditional upon the fulfillment of the severl conditions, including approval from SKK Migas and consent from PC SKR.

As part of the JOA, the parties shall establish a management committee comprising of one representative each from PT RBB, PT GSB and KENSB. Each party may designate an alternate. The chairman shall be from the co-operators and the vice-chairman shall be from the operator.

The Government of Indonesia (GOI) awarded the SWBB PSC to PT RBB and PC SKR on Nov. 13, 2008 for a period of 30 years. The exploration activities cover an initial exploration period of six years (exploration period) before commencement of development and production.

Under the SWBB PSC, PT RBB and PC SKR have participating interests of 51% and 49%, respectively with PT RBB as the operator. The exploration period may be extended for a maximum four years. PT RBB had in August 2014 submitted an application for the extension of the exploration period for up to four years which is currently pending approval from SKKMigas.

The block is located onshore in West Sumatera province and situated within the Ombilin Basin (part of elongated trend of Central Sumatera basin). The original exploration area of SWBB Block is 3,895 sq km. Currently, the exploration area has been reduced to 779 sq km mainlydue to compulsory relinquishment exploration area under the terms and conditions of the SWBB PSC.

The block has been explored by previous operators, namely, PT Caltex Pacific Indonesia (1981-1984) and Hunt Oil-Apache (1991-1994). The previous operator undertook a seismic survey and subsequently drilled the Sinamar-1 Well which tested significant gas and condensate with minor oil from multiple zones.

PT RBB has recently completed the drilling of one exploration well (Sinamar-2) to the depth of 5,550 feet as part of to fulfill the firm commitment to the GOI. Production testing on Sinamar-2 well is currently progressing with very encouraging indications.

Editing by Johannes Simbolon