Chevron seeks Indonesian contract extension

13 June 2018, Week 23, Issue 629

Chevron’s Indonesian unit has expressed interest in continuing to operate the Rokan block in Riau Province after its current contract expires in 2021, a government official has said. The company does, however, want a bigger share of production.

Chevron Pacific Indonesia (CPI) told the government that application of advanced technology available to the firm would help boost oil reserves at the block – already one of Indonesia’s most productive – by up to 1 billion barrels, Indonesian Co-ordinating Maritime Affairs Minister Luhut Pandjaitan said last week.

He made the comments following a meeting with CPI’s managing director, Chuck Taylor, and senior vice president for policy, government and public affairs, Yanto Sianipar.

CPI’s contract for Rokan will not automatically roll over because a number of other companies, including state-owned oil and gas company Pertamina, are also interested in taking over the block. An auction is slated to start in July.

The firm wants a greater share of production from Rohan because it plans to use surfactant enhanced oil recovery (EOR) technology, according to the energy ministry’s director for oil and gas, Djoko Siswanto. Employing EOR will enable 100% of the block’s oil reserves to be extracted, compared with just 60% using conventional technology, Djoko said.

The Jakarta Post reported last week that Chevron estimates the use of EOR in the Rokan block could produce 500,000 bpd of oil, up from a first-quarter average of 212,000 bpd. The January-March figure shrank 5.48% from an average of 224,300 bpd in 2017.

Chevron’s Yanto said separately that he had recently met with Luhut to update the government on the company’s achievements.

While Chevron had initially wanted to maintain its existing cost-recovery contract, it later agreed to use the new gross split production-sharing scheme but demanded a higher share, Djoko said. The company is now revising its extension request to reflect the higher share it is seeking.

“We will evaluate [the proposal],” local financial news outlet Kontan quoted Djoko as saying. “There is no agreement yet from the government.”

Edited by

Andrew Kemp


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