Santos sees Maleo first gas production delayed to 2006

Australian oil firm Santos Limited said Tuesday gas production commencement from Maleo offshore gas field, in Madura PSC, East Java would be delayed for another year to 2006 due to prolonged negotiation with the offtaker.

?Negotiations are proceeding towards the signing of a gas sales agreement (GSA), once satisfactory credit arrangements are established by PGN. Resolution of satisfactory credit arrangements will enhance the value of the project. Production is now likely to commence in 2006,? said the company.

Santos and state gas distributor PGN signed a Heads of Agreement (HoA) last January for the sale of the entire gas reserves of the Maleo field, which is estimated to contain in between 213 and 315 billion cubic feet of recoverable gas.

The project is expected to deliver up to 100 million cubic feet of gas per day for more than five years.

The development of the Maleo field will involve drilling three gas wells in 57 meters of water. Maleo gas will be connected to the East Java Gas Pipeline by a 7-kilometer subsea pipeline.

Santos has 75 percent working interest in Madura PSc with Canadian oil firm Talisman Energy holds the remaining 25 percent. (alex)