OPIC asks government to jointly guarantee West Seno project

The U.S. government-owned Overseas Private Investment Corporation (OPIC) has asked the Indonesian government to jointly guarantee the funding for the development of West Seno oil field, Indonesia?s first deep-sea oil exploration project located in Makassar strait, or about 190 kilometers off Balikpapan, East Kalimantan, Koran Tempo daily reported on Friday.

"OPIC has asked the Indonesian government to guarantee the funding for the West Seno oil field because Pertamina owns part of the project," Pertamina?s president director Baihaki Hakim said in Jakarta on Thursday.

Baihaki said the government?s guarantee should be equal to Pertamina?s 10 percent ownership in the project, which is operated by Unocal Makassar Ltd. The project is expected to start production early 2003 with an initial capacity of 60,000 barrels per day, or equal to the daily production of the Cepu oil field in Central Java.

According to Baihaki, the development of the deep-sea field would cost at least US$450 million. "Pertamina should provide about $45 million or 10 percent, and the remaining funds should come from Unocal," he added.

OPIC, which specializes in providing insurance to U.S. companies? overseas investment, said it had agreed to guarantee about US$350 million of the funding to develop the West Seno project.

Of the total funds, about $300 million will be used to finance offshore production and processing facilities, and a 60 kilometer-pipeline which transmits oil and gas to Unocal?s receiving terminal in Santan, East Kalimantan.

The remaining $50 million will be used to finance exploration and production activities at the West Seno II project. (*)