Medco expects 9.3% drop in oil production this year

PT Medco E&P Indonesia expects a 9.3 percent drop in its crude oil and condensate production this year to 39,000 barrels per day (bpd) from about 43,000 bpd last year, Media Indonesia reported on Tuesday.

Company director Budi Basuki said in Jakarta on Monday that the company?s decision in October last year to return Sanga Sanga TAC oil field in East Kalimantan to state owned firm PT Pertamina would contribute to the fall in the production this year.

He said that the company would allocate a total of US$325 million in capital expenditures this year, an increase of about $100 million from the 2008 spending, to finance ongoing projects and expansion plan.

According to him, Medco will begin this year a pilot project on the use of chemical substance surfactant in the company?s oil enhanced recovery (OER) programs in order to boost oil production from the existing oil wells.

?The pilot project which will last for about two years will cost the company about $15 million,? he said, adding that the pilot project would be conducted on the company?s 16 oil wells.

He also said that the company had also agreed on the proposed production sharing ratio of 35 percent and 65 percent in favor of the government in developing the Block A gas field in Aceh.

According to the initial plan, the Block A field will begin production in 2011 with a production level of 110 million cubic feet per day. The gas will be sold to state-owned fertilizer producer PT Pupuk Iskandar Muda and state owned electricity company PT Perusahaan Listrik Negera (PLN). (*)