Belanak facility officially inaugurated

Belanak facility officially inaugurated

The Jakarta Post/Jakarta

President Susilo Bambang Yudhoyono has officially commissioned a
new floating production facility in the South Natuna Sea's
Belanak oil and gas field on Friday, from which the country is
expected to reap at least US$7.5 billion in revenue a year.

Funded by U.S. oil giant ConocoPhillips (COP) at a cost of
more than US$800 million, the field -- the first major project
launched by the new government -- is to start producing next
month.

"Using this Belanak floating production storage and off-
loading (FSPO) facility, we hope to boost state revenue, which
would in turn increase the people's welfare," Susilo said before
officially signing the project.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
has said the country would reap about 85 percent of Belanak's oil
output; initially at 20,000 barrels a day, which would gradually
increase to about 100,000 bpd in one year.

According to the head of the country's oil and gas regulatory
implementing body (BP Migas), Rachmat Sudibyo, Indonesia would be
entitled to a share worth up to $7.5 billion a year.

"That was based on the assumption that the crude oil is priced
at $35 per barrel," Rachmat said.

In total, the facility has the capacity to process 100,000
barrels of oil and condensate a day and a storage capacity of 1
million barrels.

It can also produce 25,000 barrels of liquefied petroleum gas
(LPG), which can be used as a cooking fuel.

In addition to the revenue, Rachmat said, the Belanak field
would also boost the nation's relatively stagnant oil production.

"We expect it could help increase our crude oil output to 1
million barrels a day next year."

By the end of September, the country's oil production stood at
966,465 barrel a day of crude, as against the 1.2 million quota
set out by the Organization of Petroleum Exporting Countries
(OPEC).

Of the total, ConocoPhillips has contributed a net crude oil
production of 15,000 bpd. It also produces 248 million standard
cubic feet per day of gas, or 8 percent of Indonesia's natural
gas output.

The project -- at 300 meters in length and 60 meters in width,
or the size of three soccer fields combined -- is currently one
of the largest floating production facilities in the world.

The government is hoping the project will entice more
investment into the sector. The country's crude oil output had
been declining by an average 16 percent a year, Purnomo said.

Investment was also badly needed to explore and develop the
country's huge, yet largely untapped, gas reserves, he said.