PSC contractors suffer loss of US$1.9b in deep sea explorations

A total of 12 production sharing contractors (PSC) have suffered a financial loss of US$1,9 billion (Rp19 trillion) due to their failure in finding new oil and gas discoveries in deep sea waters during the period of 2009 and 2013.

Upstream authority SKK Migas reported on Tuesday that based on contracts agreed with Indonesia, the 12 PSC contractors will totally bear the losses and there will be no refund from the Indonesian government.

?The Indonesian people have to understand that finding oil and gas discoveries is not an easy task. And it is increasingly harder and more expensive as the potential areas to contain the reserves are in deep waters. That?s why 12 PSC contractors failed in their explorations in deep waters. They suffered a total loss of US$1.9 billion during the period of 2009 and 2013,? SKK Migas Planning Control Deputy Aussie B. Gautama said in Jakarta on Tuesday.

The 12 PSC contractors have conducted their explorations on 16 deep waters blocks in Indonesia since 2009. They had drilled 25 exploration wells at the total cost of about US$1.9 billion, but so far there has been no new commercial reserve found.

Currently, Indonesia has a total reserve of oil at about 3.6 billion barrels which are estimated to last for the next tens of years of consumption if current level of production is maintained and there is no new reserve found.

Finding new reserve of oil and gas needs a big investment and courageous decisions to take risks as the potential reserves are contained in deep sea waters.

?A number of the failed contractors have wanted to quit and return their working areas of explorations to the Indonesian government,? he said.

Besides, there are two blocks of deep waters, Kumawa and Bone Bay Blocks, which had been transferred from Marathon Oil to new operator Niko Resources.

Gautama said that Indonesia should be careful in securing its investment climate in the upstream sector, considering that all investors will need a big capital while facing high risk in conducting explorations. ?If there is no investors having a big capital and ready to take risk, then Indonesia will have no new reserves for future production,? he said.

The PSC contractor who is still active in the deep waters explorations until now is Niko Resources as the operator of 18 blocks, and non-operator in other three blocks.

Niko Resources this year and next year will continue to drill five exploration wells in five blocks of deep sea. It is now the only hope of Indonesia to find new reserves of oil and gas in deep sea waters.

List of PSC Contractors who fail in deep sea explorations:

No ?	PSC Contractors	Working areas	Wells ?	Realized costs (million US$)	Status
1	ExxonMobil	Surumana	Rangkong-1	123	Dry Well
2	ExxonMobil	Mandar	Kris-1	45	Biogenic Gas Uneconomic
			Sultan-1	110	Dry Well
			Kriss Well-1 ST	24	Dry Well
3	Statoil	Karama	Gatotkaca-1 ST	98	Dry Well
			Anoman-1	43	Dry Well
			Antasena-1	33	Dry Well
4	ConocoPhillips	Kuma	Kaluku-1	150	Waxy Oil (MDT)
		Amborip VI	Aru-1	58	Dry Well
		Arafura Sea	Mutiara Putih-1	103	Dry Well
5	Talisman	Sageri	Lempuk-IX	84	Dry Well
6	Marathon	Pasang Kayu	Bravo Well	103	Dry Well
			Romeo Well	23	Dry Well
			Romeo B-1	25	Technical Problem
			Romeo C-1	58	Technical Problem
7 ?	Tately	Budong-Budong ?	KD-1	34	Technical Problem
			LG-1	17	Uneconomic Well
8	Japex	Buton	Benteng-1	31	Dry Well
9	CNOOC	SE Palung Aru	Sindoro-1	50	Dry Well
10	Hess	Semai IV	Andalan-1	164	Dry Well
			Andalan-2	59	Dry Well
11 ? ?	Niko Resources ? ?	Kofiau	Ajek-1	37	Sub Commercial Gas Discovery
		W. Papua IV	Cikar-1	87	Temporarily Suspended
		N. Makassar Strait	Pananda-1	90	Drilling
12	Murphy Oil	Semai II	Lengkuas-1	215	Dry Well
?	?	?	Total	1.900	?

Editing by Benget Besalicto Tnb.