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Tue, 16 Dec 2003

JP/Caltex to invest up to $400m to expand oil fields

Caltex to invest up to $400m to expand oil fields

Sandy Darmosumarto, The Jakarta Post, Jakarta

Oil and gas company PT Caltex Pacific Indonesia (CPI) is planning to maintain between 510,000 and 515,000 barrels per day (bpd) of oil and gas production next year despite the current decline in output due to maturing oil fields.

CPI President Humayun Bosha stated that "Caltex will invest between US$300 million to $400 million next year." He did not specify how the funds would be utilized, but a source with the company stated that the company's new venture and development team is reviewing the possibility of obtaining new oil and gas blocks, both onshore and offshore.

He was speaking to reporters on the sidelines of a hearing with the House of Representatives Commission VIII on energy and mining affairs. The meeting was included two other oil and gas producers PT ConocoPhillips Indonesia and the local unit of China's oil firm PetroChina.

CPI also stated its plans to reduce its workforce by 20 to 30 percent in order to increase efficiency and reduce operating costs.

Under the production sharing contracts (PSC), the government must compensate contractors' recovery costs, thus taking away revenues it gained from the contractors.

CPI was able to push down the current year's operating costs by $32 million. In addition, over the past three years CPI has continuously contributed over $3 million yearly into government coffers. The company estimated that for every $28.2 per barrel of oil it sells, it can give back $19.8 towards government revenue.

Meanwhile, ConocoPhillips said it experienced a slightly different trend. ConocoPhillips was able to increase its oil and gas production from a constant 48 million barrels of oil equivalent (MMBOE) in the past two years to 58 MMBOE in 2003.

In terms of recovery costs, ConocoPhillips' president and General Manager Paul Warwick stated that his company incurred a rise from around $310 million and $330 million in 2001 and 2002, respectively for the Corridor Block, to $350 million in the current year.

With respect to government revenue, the current contracts applied to the company's two largest producers, namely the Corridor Block and Block B, are forecasted to contribute around $16.5 million in government revenue.

PetroChina, on the other hand, experienced a decline in production from 16,396 MBOE in 2002 to 14,987 in Nov. 2003. The company's cost recovery is currently at $245 million, a rise from last year's $238 million, but a decline from the 2001's $317 million when it took over Devon Energy.

According to the company's president, Wei Zhi Gang, his company will contribute a total of $165 million towards government revenue this year. This figure constitutes an increase over the last two years' $65 million and $127 million, respectively.