Unocal to triple East Kalimantan gas output
Unocal to triple East Kalimantan gas output
Shigeru Sato, Dow Jones, Tokyo
Unocal Indonesia Co., a unit of U.S.-based energy company Unocal Corp., plans to triple its production of natural gas from East Kalimantan, Indonesia, over the next decade to 1 billion cubic feet a day from the current 300 million cubic feet.
As a first step in the plan to boost output, Unocal will start production in July at the offshore West Sono field, said Brian W.G. Marcotte, President of Unocal Indonesia, in an interview with Dow Jones Newswires conducted on Monday.
Gas from West Seno will be delivered to the liquefied natural gas plant at Bontang in East Kalimantan, where Unocal currently provides 8 percent of the facility's gas requirements, Marcotte said. He was speaking in the margins of the World Gas Conference in Tokyo.
Unocal has been supplying gas to the Bontang LNG plant since 1979. It is one of the world's largest LNG facilities.
"The country is in the midst of a shift to gas from oil for the primary energy for development", Marcotte said, adding he expected the Indonesian government will likely allocate a higher proportion of funds to its gas industry in the next decade.
The capacity of the Bontang LNG plant will likely be expanded as Unocal's gas output increases, he said. The current LNG production capacity at Bontang plant is 22.3 million metric tons a year.
Marcotte expects capacity to be boosted to 25.3 million metric tons a year, by the addition of a new 3 million tons-a-year LNG unit to the existing facility.
Most of the incremental LNG supply would be exported to Japan, Taiwan, and South Korea, where gas demand is poised to grow more rapidly in the near-term than in Southeast Asia.
Despite likely fierce price competition in Asia among LNG producers over the next decade, LNG from the Bontang plant will be traded at very competitive prices, Marcotte said, noting that Unocal's gas production costs have fallen sharply in recent years.
Thailand has been, and in future will continue to be one of the key countries in which Unocal focuses its oil and gas investment, he said.
Unocal Thailand is set to invest US$200-300 million this year in an effort to maintain its gas production levels at 1.1 billion cubic feet a day, Randolph Howard, Vice President of International Energy Operations said.
To capitalize on an expected further rise in Thai gas demand, Unocal plans in early 2006 to start production from the Arthit field, at some 300 million cubic feet a day.
Discovered in 1999 by PTT Exploration & Production PCL, the Arthit field is estimated to hold reserves of between three and six trillion cubic feet.
"Gas from Arthit will be delivered via a new pipeline to be constructed by PTT," Said Howard.
Thai gas demand is growing sharply, especially, from the power, household, and petrochemical sectors, Howard said, expressing confidence in Unocal's future gas business in the country.
Over the next decade, Unocal estimates its joint ventures will invest about $4.5 billion on their operations in Thailand. This figure for capital spending could increase, dependent on additional exploration and development in Thailand.