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)