PHE ONWJ obtains much higher output split
Tuesday, August 22 2017 - 01:19 AM WIB
Petromindo|Khalsa
Upstream company PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ), which operates the ONWJ block, has obtained a much higher oil and gas output split that those stated in its renewed contract signed on January 18, Bisnis Indonesia reported on Tuesday.
?The total oil output split for PHE ONWJ is 73.5 percent, status until end of 2017, and for gas is 81 percent,? PHE President Director Gunung Sardjono Hadi told the paper.
PHE ONWJ, a unit of PHE, is the first upstream company in the country whose production sharing contract is based on the new gross split scheme (as opposed to the previous cost recovery scheme contract). Its contract over the ONWJ block was renewed by the government on January 18 of this year, transferring the entire block to the company. Under the gross split mechanism, the government will no longer reimburse the operating costs of upstream companies in return for higher output split.
Under the original gross split scheme contract, PHE ONWJ was given an oil output split of 43 percent, while 57 percent went to the government. For gas, the company obtained output split of 48 percent, with the rest going to the government.
The paper said that the final split was then revised to allow the company to have greater split of 52.5 percent for oil, and 62.5 percent for gas.
Specifically for this year, the government further increases the oil and gas output split of PHE ONWJ to 73.5 percent, and 81 percent, respectively, taking into account oil price and cumulative production factors, the paper said.
Gunung said that the new split will only be applied for this year as the two aforementioned factors will change next year. Despite the change, he said that there was no need to amend the January 18 contract because the factors affecting production split have been defined in the contract.
Gunung said that with the much higher production split, PHE ONWJ is set to spend around US$400 million in capital expenditure this year to among others finance the drilling of six development wells and repairing production facilities. (*)