Problems prompt Medco's hold on Riau oil output
Problems prompt Medco's hold on Riau oil output
JAKARTA (JP): Pipeline problems forced publicly listed oil and
gas company PT Medco Energi Corporation to suspended its oil
production in Lirik, Riau, for the past six months, cutting its
total oil output by 10 percent, the company said on Tuesday.
The president of PT Exspan Sumatra, a Medco subsidiary, Rashid
I Mangunkusumo, said the company halted production at the Kampar
block in late-December 1998 due to problems in the pipeline used
to transport crude oil from the block to state oil and gas
company Pertamina's oil terminal in Buatan on the Siak River.
The 160-kilometer pipeline linking the oil block to the Buatan
terminal no longer operated properly because of age, he said. The
pipeline was constructed in 1956.
"Thus far, our operation in the area is still at standstill,
but we are currently trying to transport the crude oil to the
terminal by trucks," Rashid told The Jakarta Post on the
sidelines of a press conference on the results of the company's
shareholders meeting.
Before suspending its operations, Exspan extracted 3,500
barrels per day (bpd) from the Kampar block, or about 10.8
percent of Medco's total oil output of 32,340 bpd.
Besides the Kampar block, Medco, which is the largest national
private oil and gas company, has four other oil and gas
production sharing blocks. Two of the blocks are in Central
Sumatra -- the Rimau and Pasemah blocks -- and the other two
blocks are in East Kalimantan -- the Sanga-Sanga-Semboja-Tarakan
and Tarakan blocks.
In addition to Exspan, a Pertamina production unit and a local
company called JOB Pertamina Lirik Petroleum -- a joint venture
between Pertamina and local oil producer PT Satmarindo -- operate
oil wells in the Kampar block, with oil outputs of 200 bpd and
1,800 bpd, respectively.
These enterprises have also been forced to stop production due
to the pipeline problems, Rashid said.
"The pipeline problem has caused losses not only on us, but
has also reduced the government's potential oil revenue," Rashid
said.
He said Pertamina's attempts to repair the pipeline over the
past six months had failed due to a lack of human resources in
the area.
A new pipeline needs to be constructed in the area to replace
the old one, but Pertamina lacks the funds for the project,
Rashid said, adding the construction cost for a new pipeline
could reach millions of dollars.
Rashid said Medco needed about 40 trucks to transport its
daily oil output from the block, but so far was only able to
secure 15 trucks to transport the oil. Each truck has the
capacity to carry 100 barrels of oil to the Buatan oil terminal.
Profit
Meanwhile, Medco president John S. Karamoy announced Medco's
net profit in 1998 was Rp 375 million, almost triple the Rp 96
million the company booked in 1997.
The company's shareholders agreed at the meeting to the firm's
decision not to pay dividends for 1998 because the company needed
the funds to meet its financial obligations.
Karamoy said the company's proven and probable reserves rose
11.8 percent to 357 million barrels of oil equivalent (mmboe)
last year from 313 mmboe in 1997.
Oil production rose by 60 percent last year to 32,340 bpd
following the opening of the Kaji-Semoga oil field in August.
Gas sales increased by 11.6 percent in 1998 to 67 million
cubic feet per day following an increase in gas supplies to the
Tanjung Batu power plant in East Kalimantan owned by state
electricity company PLN.
The company's methanol output on Bunyu Island in East
Kalimantan rose to 233,166 tons in 1998 from 189,220 tons in
1997.
Finance director Sugiharto said the company still had a total
debt of between US$250 and $260 million, but negotiations with
creditors to restructure the debt were proceeding smoothly. (jsk)