Uncertainty clouds Bengara II block

By Alexander Ginting

Continental-GeoPetro (Bengara-II) (CGB2) is seeking to extend exploration period of Bengara II exploration block in East Kalimantan after the current term has expired in December 4, 2011.

Jakarta-based firm Continental Energy Corporation reported Monday that the majority shareholder of CGB2, Kunlun Energy Company Ltd., is negotiating with Indonesian authorities for an extension. ?As at this date, the outcome of these negotiations is uncertain,? the company said in a report released Monday. Continental Energy has 18 percent stake at CGB2.

Under the initial exploration term of the Bengara-II PSC as amended, CGB2 had until 4 December 2011 to file a plan of development (PoD) with Indonesian authorities for the first of any oil or gas developments within the Bengara-II PSC or the PSC would expire on 4 December 2011. Upon approval of this PoD, CGB2 would be entitled to hold the Bengara-II PSC for its full 30 year term until 4 December 2027.

However, due to chronic delays to 3D seismic field operations attributable to surface damage claims issues beyond the control of CGB2 during 2009, 2010, and 2011; CGB2 did not have sufficient time to complete seismic processing and interpretation to meet the 4 December 2011 deadline because field acquisition of the seismic program only completed in November 2011. Therefore, CGB2 has applied for lost time compensation consisting of a requested two year period extension of time until December 4, 2013 to file the plan of development.

?At report time, CGB2's request for a lost time extension to the 4 December 2011 Bengara-II PSC expiry has not yet been approved by the Indonesian governmental authorities and Kunlun, as majority shareholder of CGB2 has not yet decided whether it wishes to pursue such extension in light of ongoing seismic interpretation. Therefore, the outcome of these negotiations between Kunlun and the Indonesian authorities and Kunlun's willingness to continue further expenditures in the event an approval is negotiated, make the future of the Bengara-II PSC uncertain,? Continental said in a report dated September 10, 2012.

The block contains Makapan gas field which was discovered by previous operator in 1988.

Editing by David Mustakim