MEMR differs with SKK Migas over proposed increase of Cepu block output
Saturday, June 18 2016 - 03:12 AM WIB
While SKK Migas has turned down a request by the block?s operator ExxonMobil Cepu Ltd (EMCL) to increase output to 200,000 bpd from the current 185,000 bpd, MEMR?s Director of Upstream Development, Djoko Siswanto was quoted by bisnis.com as saying that there is an opportunity for Cepu block to increase output up to 205,000 bpd.
He said that the higher output from the Cepu block, which is located in East and Central Java provinces, is an option to avoid state-owned oil and gas firm PT Pertamina from raising crude import as the firm may have to allocate greater crude from the government?s take in the block to meet the expected higher demand from PT Tri Wahana Universal (TWU), which operates a mini refinery in Bojonegoro regency, East Java. He said that TWU has made a request for higher crude allocation of 16,000 bpd. TWU?s refinery has been suspended since February as the firm has yet to reach price agreement over crude supply.
He explained that if the proposed higher Cepu block production is not approved, supply to Pertamina?s Integrated Supply Chain will be less, forcing it to increase import to meet the crude requirement of the firm?s refineries. ?Thus, to avoid (increasing) import, (Cepu block production) must be increased,? Djoko said.
As has been previously reported by this portal, EMCL has proposed to increase the Cepu block?s production as recoverable reserve is higher than the initial estimate. However, SKK Migas Chief Amien Sunaryadi said that the regulatory body has rejected the request after taking into account various aspects including so-called sub-surface estimate, flare gas from higher output, and current oil price.
He said that EMCL must maintain output at 185,000 bpd as set in the 2016 Work Plan & Budget.
EMCL owns a 45 percent interest in the Cepu block. PT Pertamina E&P Cepu (PEPC), a subsidiary of state-owned oil and gas PT Pertamina, holds another 45 percent interest in the block, while the remaining 10 percent are held by minority local investors. (*)