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Wed, 25 May 2011

JC/Samsung Signs Contract to Build Cepu Oil Facilities

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By From: The Jakarta Globe
By Ririn Radiawati Kusuma |

The Indonesian unit of ExxonMobil Corp. has awarded contracts worth more than $780 million to South Korean giant Samsung and its Indonesian partner, Tripatra Engineering, to build facilities at Cepu block, the energy regulator said on Tuesday.

BPMigas chairman Raden Priyono said the project would include building an oil-production facility at the oil and gas field in Central Java. The project was estimated to cost $900 million, but the consortium bid $780 million.

“The tender will be completed soon, and its construction is expected to start in August this year,” Piryono said on Tuesday after meeting with lawmakers on the House of Representatives Commission VII, which oversees energy affairs.

Tripatra is the engineering, procurement and construction services unit of Indika Energy, the nation’s leading integrated energy company.

The Cepu block, located in Central Java, is operated by US oil giant ExxonMobil. The field is 45 percent owned by ExxonMobil and 45 percent by state oil and gas company Pertamina, with the remaining 10 percent held by state enterprises.

Cepu’s project will contain five separate units, Priyono said, including an onshore production facility, onshore pipes, offshore pipes, an offshore pile and supporting facilities such as an office building. The block is expected raise its disappointing output to 165,000 barrels of oil per day once the facilities are done in 2013.

During his regular meeting with legislators, Priyono also said BPMigas had forecast the country’s oil and gas revenue to reach Rp 266 trillion ($31.1 billion) this year, higher than the Rp 227 trillion projected in the state budget, thanks to higher oil prices.

Crude oil prices have reached about $100 per barrel, well above the government’s oil price assumption of $80 per barrel in the 2011 state budget.

The revenue forecast is based on assumptions that oil lifting will come in between 933,000 bpd and 945,000 bpd this year. The government has said it expects lifting of 970,000 bpd.

“Even though oil lifting is below the target, gas production forecast to be above the target,” Priyono said.

BPMigas data showed first-quarter oil lifting at 877,000 bpd, well below projections. The regulator said last week that it would summon oil and gas companies to explain their failure to meet their targets. Out of 148 registered oil and gas companies in Indonesia, 32 have failed to meet their targets set in the 2011 state budget.