Ophir begins commercial production at Kerendan field
Tuesday, September 13 2016 - 07:34 AM WIB
UK-based firm Ophir Energy plc said Tuesday that commercial gas production has commenced from the Kerendan field, Bangkanai PSC in Indonesia?s Central Kalimantan Province, in line with the schedule Ophir announced on acquiring the asset in March 2015.
The company said in a statement that production started at 3-5 MMscfd to enable PT. PLN, the Indonesian state electricity company, to commission the power plant and transmission system. ?Post commissioning, sales will be initially maintained at a restricted volume of 5 MMscfd at the request of PLN to enable them to meet demand for power in immediate Buntok region,? the statement said.
Ophir said that the first 160 km section of the transmission line from the power plant to Buntok is complete and the full 290 km transmission line to Tanjung is expected to be completed later this year. Once the Tanjung line is completed, production is expected to increase to 20 MMscfd, in line with the Daily Contract Quantity, it added.
Under the existing gas sale agreement (GSA) the contractual start date for production was January 11, 2016 and therefore a take or pay provision has been active since this date. Ophir said it expects to receive settlement for the take or pay shortfall in the first quarter of 2017, after the completion of a full contract year. The annual contract quantity is 7.3Bcf and the take or pay settlement will equate to 80 percent of the volumes that have not been drawn. The total contracted volume for this first phase of production at Kerendan is 122 Bcf. Ophir has rights to an additional uncontracted 2C contingent resource at Kerendan of 320 Bcf (458Bcf gross).
Oophir said further discussions regarding an upward adjustment to the contracted gas price are at an advanced stage and are also expected to conclude before the end of this year. The current contracted gas price is $4.79 per MMBtu escalating at 3 percent per annum.
Ophir holds a 70 percent operating interest in the Kerendan field, Bangkanai PSC and PT Saka Bangkanai Kalimantan holds a 30 percent equity interest.
Editing by Reiner Simanjuntak