Indonesia plans Irian Jaya gas output

Indonesia plans Irian Jaya gas output

SINGAPORE (Reuter): Indonesia plans to bring two gas trains onstream in Irian Jaya by 2003-2004, the president of Atlantic Richfield Co (ARCO) Indonesia said yesterday.

"State-owned Pertamina oil company announced through an interview that they were shooting for 2003/4 start ...that is still our goal," Leon Codron told Reuters in an interview on the sidelines of an Asian upstream conference.

ARCO holds 80 percent and 40 percent in the Wiriagar and Berau blocks in Bituni Bay, Irian Jaya, the western half of New Guinea island.

Kanematsu Corp holds the remaining 20 percent in Wiriagar and 12 percent in Berau, which is also held by Occidental Petroleum Co with 22.86 percent and Nippon Oil Co. 17.14 percent.

Industry estimates suggest proven reserves of gas at Irian Jaya were about eight trillion cubic feet (TCF).

But Codron said it would be speculative to comment on proven reserves at this point.

"At the appropriate time, we will make announcements," he said.

"It doesn't matter whether we have 20 TCF or 15 TCF. The key is to have sufficient proven reserves for two trains that will meet market timing and that we enter that market at the first opportunity," he said.

"That is indicative of where we will be in the next 18 months," Codron said.

Industry sources have said the high costs of drilling in the area will be a deterrent for other companies to intensify exploration in the eastern part of Indonesia.

Codron said although Indonesia presents an attractive target for selective upstream investments and has strived to remain competitive, Indonesia may consider some changes to attract large upstream investors.

"The ability to adapt to change in order to remain competitive is paramount," he said.

The four changes he recommended were more incentives for investment in marginal fields and enhanced oil recovery (EOR), tax consolidation, transparency in domestic pricing and simplifying administrative prices.

"We are clearly in a period of transition in Indonesia, adapting to new global situations," he said. "It is really a competitive environment worldwide in the oil and gas sector from the investment standpoint."

He said most of these reforms were already taking form.