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.