Conoco to spend $2.5b in Indonesia

Conoco to spend $2.5b in Indonesia

Reuters, Jakarta

Conoco Indonesia said on Thursday it expected to spend over
US$2.5 billion in Indonesia's oil and gas sector in the next nine
years, as part of planned investment of $3.4 billion between 1998
and 2010.

Patrick Meyer, Conoco Indonesia president and general manager,
said the company remained focused on Block B in the Natuna Sea
where all its current production comes from.

He said Conoco would double crude output and quadruple gas
production before the end of the decade.

"We planned to invest about $3.4 billion over the roughly 12-
year period, which will be on a (gas) pipeline, drilling,
additional platforms, and also on the Belanak FPSO (floating
production storage and offloading unit)," Meyer told Reuters in
an interview.

"Of that, already spent so far is in the range of $750
million," he said.

Conoco pumps about 44,000 barrels per day (bpd) of crude
mainly from the Belida field, which was developed a decade ago
and is seeing output decline by 15 percent per year.

Meyer said the company's production was expected to steadily
decline until 2004 when the Belanak oil and gas field is slated
for start up, bringing output back up to some 60,000 bpd.

Belanak is being developed using an FPSO and is due to begin
production in the third quarter of 2004.

By 2007, Meyer said Conoco's crude output was expected to
double from today's level to about 80,000 bpd, the bulk of which
would come from Belanak.

Meyer said Conoco Indonesia had shifted focus to gas
production, partly in line with the company's global strategy but
also because of more attractive incentives offered by state firm
Pertamina compared to oil exploration.

Conoco has a 35 percent stake in Block B compared with a more
usual 15 percent contractor shareholding given for oil blocks.

It currently produces about 100 million cubic feet a day (cfd)
of gas.

"We will continue to emphasize gas over oil and will work to
develop gas aggressively," Meyer said.

"For the next five years we are planning two platforms, the
Belanak FPSO, and installing quite a few subsea gas wells to
supply gas to Singapore and Malaysia," he said.

Under an agreement signed in March 2001, Indonesia will supply
pipeline natural gas from Block B to Malaysia with deliveries to
start in August this year.

Block B is also part of the West Natuna consortium, which has
been supplying gas to Singapore since early last year.

Meyer said gas output was expected to rise fourfold by 2007 to
400 million cfd.

"In the course of five to six years, we are going to be
transforming the business from oil to gas and in terms of size,
will be looking at production size three to four times where we
are today," he said.

He said the additional gas was in line with volumes already
contracted to Singapore and Malaysia and would come mainly from
Block B.

Meyer said seismic studies on Conoco's newly awarded Nila
block would take place later in 2002, but it would take at least
three years before the size of the field's reserves becomes
clear. Nila is adjacent to Block B.