Sugih expects production at Lemang block in Q2
Tuesday, December 16 2014 - 01:26 AM WIB
IDX-listed oil and gas firm PT Sugih Energy Tbk expects production at the Lemang oil and gas block in Jambi to start in the second quarter (Q2) of next year.
?Production of the Lemang block is expected in the second quarter,? said President Director Andhika Anindyaguna on Monday.
He said that plan of development for the block is expected to be completed in the first quarter of next year.
Andhika added that the company was hopeful that ongoing talks with a foreign bank for a US$150 million loan facility could also be concluded in the first quarter. Financing need for the development of the Lemang block next year is estimated at US$20 million, with production target of 2,000-3,000 bpd.
The Lemang block, with an acreage of 2,120 sqkm, holds 28 prospective wells. According to oil and gas international consultant DeGolyer & MacNaughton, the block contains estimated reserves of 511 million barrels of crude oil and 468 billion cubic feet of gas.
?We have so far only explored the Akatara prospect, where we have drilled three wells, which have been declared to be commercially feasible,? Andhika said.
Going forward, Andhika said the company aims to increase production of gas so that it would be equal to oil as the price of gas is seen more stable than oil, which has seen its price plunged to around $60 per barrel.
He added that the company was closely monitoring oil price development, saying that if the price further falls to $50 per barrel, the company would face difficulties in proceeding with developing its oil and gas fields. ?If the price is below $60 or around $50, probably it would no longer be economical to develop the field,? Andhika said.
Aside from the Lemang block, Sugih also owns other blocks in Sumatra including Kalyani in South Sumatra and Selat Panjang in Riau. The Selat Panjang block is anticipated to increase gas production next year to 5.5 mmscfd from the current 2 mmscfd, which is supplied to the Rawa Minyak gas-fired power plant in Siak Regency, Riau, operated by state-owned power firm PLN.
PLN plans to further expand the capacity of the Siak power plant from the current 14 MW to 25 MW in the next two years.
The company hopes to be able to develop seven wells within the Selat Panjang block, with total development cost estimated at $75 million, he said.
Editing by Reiner Simanjuntak