Total to spend $1 billion in Indonesia this year
Leony Aurora, The Jakarta Post/Jakarta
Oil and gas giant Total E&P Indonesia plans to spend US$1 billion this year to boost production and make up for declining output from other producers that supply PT Badak NGL in Bontang, one of the nation's two liquefied natural gas (LNG) plants.
President director and general manager, Roland Festor, told reporters on Thursday that the funds, about 10 percent higher than the $900 million it spent last year, would be used to establish nine new rigs and platforms.
"We are developing two new fields called Sisi (and) Nubi," said Festor at the sidelines of the four-day IndoGas conference, referring to parts of the Mahakam oil block in East Kalimantan.
The new fields were expected to start producing in mid 2007, he said.
"We'll compensate as much as possible the decline from the other producers," said Festor.
Total and two other companies -- including Unocal -- are supplying Badak NGL in Bontang, East Kalimantan.
Indonesia is in dire need of new gas fields as some of the existing ones, which have been operating since the 1980s, are seeing a decline in output.
State oil and gas firm PT Pertamina recently announced that it had rescheduled the delivery of 51 shipments of LNG, representing more than 2.75 million tons,G to its three main buyers of Japan, South Korea and Taiwan.
Forty two of the loads were supposed to be provided by the Bontang plant and had to be postponed due to problems in the Attaka field, operated by Unocal. The company, however, said that the damage caused by a fire in February last year had been repaired and the decline was caused by the aging field.
Following the shipment rescheduling, Japan's third largest energy producer Chubu Electric Power Co. has said that it might not extend its contract with Indonesia, worrying that the country would not be able to meet its commitments.
The government quickly reacted by saying that it would offer lower prices to costumers that wished to continue buying LNG from Indonesia.
Amid the shortfall from other producers, Total is seeing a rise in gas output, beating historical records on Jan. 2 with 2.87 billion cubic feet (bcf) per day, equivalent to 631,000 barrels of oil in one day.
"Our production in 2004 is 2.4 billion bcf of gas on average per day, which corresponds to 533,000 barrels per day, or 5 percent more than in 2003," said Festor.
"We expect to go to at least 2.5 bcf per day this year."
Festor said that the production was higher than the company's commitment to Bontang and the excess would be used to compensate other producers' fall in output. "But it will not be enough to cover the decline in Attaka," he said.
Total's current operation sites cover an area of 2,000 hectares, with seven oil and gas fields, and 500 production wells in remote areas of East Kalimantan, including Handil, Bekapai, Peciko, Tambora and Tunu, supplying about 66 percent of Bontang's gas requirements.