Santos reports completion of Oyong development drilling program

Australian oil and gas firm Santos Limited reported Wednesday that the seven well development drilling program at the Oyong field of Sampang PSC offshore East Java was completed with five wells drilled and completed as oil wells and two for future gas wells.

?The oil development phase was approximately 90% complete at the end of the quarter (Q4),? Santo said in its quarterly report, adding that contracting for the Floating Storage and Offtake (FSO) vessel was completed and contracting and conversion of the production barge was progressed.

However, due to the timing of the conversion of the FSO and production barge, the target first oil date has slipped from early 2006 to late in the second quarter of 2006, while first gas deliveries are expected during the first quarter of 2007, Santos said.

Santos also said that total project cost is forecast to increase by approximately 30 percent to US$130 million as a result of additional development drilling costs and higher barge conversion costs.

Separately, Santos? partner in the field, Cue Energy Resources Limited, said Tuesday that initial field oil flow rates are likely to be less than 10,000 barrels of oil per day, while gas production rate is not expected to be significantly changed and will be between 40 and 60 million cubic feet per day.

A clearer picture is unlikely until the field has been producing oil for several months, Cue added.

Santos operates the Oyong field with 40.5 percent interest. Others participants in the field are Singapore Petroleum Company 36 percent, Cue 13.5 percent, and East Java regional government associated company PT Petrogas Oyong Jatim 10 percent. (Robert)