Medco aims to halt oil output decline

The Jakarta Post, Jakarta, Surabaya | Tue, 05/06/2008 9:40 AM

PT Medco E&P Indonesia plans to spend US$260 million this year on the development of its oil and gas blocks, the company's executive says.

President Director Lukman Mahfoedz said Monday the company would drill 80 wells in existing fields and about 20 wells in exploration areas this year with a total budget of $150 million.

"We need this amount of money to maintain our fields' production because most of their reserves are depleting," he said, adding that the company targeted to produce 47,000 barrels of oil per day (bpd) this year, down from last year's 50,000 bpd.

In addition to the $150 million, Lukman also said the company would spend another $110 million to develop facilities for ongoing gas projects at Blok A in Nanggroe Aceh Darussalam and at the Senoro Liquefied Natural Gas (LNG) plant in Central Sulawesi.

Blok A is still in the development phase and is due for completion in 2010, while progress on the Senoro LNG plant is being delayed by negotiations over gas prices.

In a bid to cash-in on soaring oil prices, PT Medco Energi International, under parent-company Medco E&PT, is targeting a net profit of $92 million this year, Medco Energi President Director Hilmi Panigoro has said.

He said the company's target was based on promising performance in this year's first quarter, when the company booked $23 million in net profit, or a 45.5-percent increase compared to the same period last year.

Medco Argo, another subsidiary of Medco, is set to open new palm oil fields in Lampung next October.

Medco Agro deputy director for engineering Krisdwiarto told The Jakarta Post in Surabaya the new fields would add to company's existing fields in East Kalimantan.

The company plans to cooperate with Japanese firm Itochu, which would provide soft loans for machine procurement. The total value of the oil palm projects has not yet been calculated.