Medco plans to renegotiate contracts for its major projects
Thursday, December 18 2008 - 01:44 AM WIB
The company?s president director Darmoyo Doyoatmojo said in Jakarta on Wednesday that the renegotiation would be needed as an adjustment to the drop in the crude prices.
As the contracts for the construction of the seven projects were all signed when oil prices reached above US$100 per barrel, the fall in the crude price to below US$50 per barrel in recent months should allow the company to renegotiate the contracts, he said.
?We hope the renegotiation will enable the company to cut the capital expenditure for the next five years,? he said, adding that the value of the contracts for the seven projects were no longer realistic due to the sharp drop in the crude prices.
The seven projects include the development of an oil field area 47 in Libya, the construction of a geothermal power plant in Sarulla, North Sumatra, the development of several gas and oil blocks including the Senoro gas field in Senoro-Toili block in Central Sulawesi, the Singa gas field in Lematang block in South Sumatra, the enhanced oil recovery (EOR) project in Rimau block in South Sumatra and the Block A in Aceh.
Medco earlier said that it would need at least US$1.7 billion in capital expenditure for the company?s expansion plan until 2013.
Meanwhile company financial director Cyril Noerhadi said its firm's output for next year is projected to drop by 5-10 percent to between 58,910 and 62,120 barrels oil equivalenet per day due to natural depletion of its wells and the sale of some fields, including the Tuban block and East Kalimantan TAC. (denny)