Pertamina, Statoil to spend $75 million on Karama block

Ika Krismantari, The Jakarta Post

State oil and gas firm Pertamina and its partner, Norweigen oil firm Statoil, have won the rights to operate the oil and gas block in the Makassar Strait and have set aside US$75 million to drill in the Karama block over the next three years.

The consortium one the rights last Friday, after the block, along with 19 others, was offered up by the government through a tender.

Tri Siwindono, Pertamina's deputy director of upstream development, said over the weekend that the firms would jointly operate the area, which is believed to hold potential reserves of 200 million barrels of oil.

He said that the majority of the stake in the area would be held by Statoil with a ratio of 51 percent and 49 percent, adding it would also provide the technologies needed for the exploration activities in the block.

Karama is one of 12 blocks that attracted bidders in the tender. It lies over an area of 4,287 square kilometers. Pertamina and Statoil will received 35 percent of the revenue from oil and 40 percent of the gas revenue, with the remaining 65 percent to go to the government.

For its three-year commitment, the consortium has so far spent a total of $8 million, including the $5 million required for the contract signature bonus.

The tender was expected to help the government speed up efforts to boost the country's dwindling oil production, which stands at more than 1 million barrel per day currently.

As for Pertamina, it has targeted an oil production increase of 69 percent in the next three years, Pertamina E&P president director Kun Kurnely has said.

Pertamina's production stands at 101,258 barrels oil per day (bpd), with 73,604 bpd coming from its own fields and joint fields yielding 27,654 bpd in 2006.

The company plans to increase its total production gradually to 117,536 bpd by 2007, 138,840 bpd by 2008 and 171,894 by 2009 by intensifying its exploration activities.

Meanwhile for gas production, the company has targeted an 83 percent increase in its gas production, to 1.746 million standard cubic feet per day by 2009 from the current 0.954.

To achieve the target, Kun added that Pertamina was looking new wells to raise their numbers to 23 in 2007, 26 in 2008 and 25 in 2009.