Serica updates Indonesian ops
Monday, November 30 2009 - 03:04 PM WIB
Field Appraisal and Development -Glagah Kambuna TAC - Kambuna Field, Offshore North Sumatra (Serica 50%)
Progress has continued throughout 2009 towards the first production from the Kambuna field and on 11 August gas sales commenced with gas being introduced to the pipeline system for transportation to the Belawan Power Plant, operated by the Indonesian state electricity generation company PLN.
Production from Kambuna was suspended on 25 September at PLN's request so that it could carry out repairs to its gas turbines. Production from the field restarted on 7 November at an initial rate of 10 million standard cubic feet per day ("mmscfd"). Resumption of gas sales also allowed condensate production to restart, with approximately 100 barrels of condensate produced for each million cubic feet of sales gas.
The gas sales contract with PLN provides for an average contract quantity of 35 mmscfd for the first twelve months and it has already been demonstrated that rates in excess of this can be delivered through the present temporary facilities. Following the unplanned shut-down, it is expected that PLN will nominate up to 40 mmscfd, in order to reduce its potential annual take-or-pay liability. Gas sales to the second buyer, Pertiwi Nusantara Resources ("Pertiwi") are expected to commence in January 2010. The contract with Pertiwi provides for an average contract quantity of 12 mmscfd but, until the permanent onshore processing facility is completed in June 2010, the maximum total gas sales rate will be approximately 40 mmscfd, with about 4,000 barrels of condensate per day.
Once the permanent facilities are commissioned, total sales gas rates of approximately 50 mmscfd should be achievable. The buyers may nominate quantities in excess of the contract rates in order to make up for any shortfall. However, under the Take or Pay provisions of the contracts, at the end of each 12 month sales period Serica will receive the value of at least 90% of any gas contracted but not taken.
The Kambuna gas is used for power generation to supply electricity to the city of Medan in north Sumatra and for industrial uses. The gas sales prices per thousand standard cubic feet under the contracts with PLN and Pertiwi are approximately US$5.40 and $7.00 respectively, escalated at 3% per annum. The price for Kambuna condensate is based on the official Attaka Indonesian Crude Price less 11 cents per barrel. Attaka has historically traded at a slight premium to North Sea Brent Crude.
Exploration-Kutai PSC (Serica: Operator, 54.6% working interest)
The Company has completed seismic surveys in both the offshore and onshore parts of the PSC. The interpretation of the offshore 3D seismic data has revealed several exploration targets, of which the Dambus and Marindan prospects are the most significant. In 2010, Serica plans to drill two offshore wells and possibly an onshore well.(end of excerpt)