Pertamina struggles to achieve Mahakam block drilling target

01 August 2018, Week 30, Issue 636

Indonesia’s state-owned Pertamina is behind schedule in terms of completing development wells at its Mahakam block in East Kalimantan, having only finished one quarter of this year’s planned total.

Pertamina has earmarked US$1.7 billion for exploration, development and production activities in the Mahakam block this year. Of that amount, US$700 million will go on capital expenditure and the remaining US$1 billion will be used to cover operational costs.

Pertamina Hulu Mahakam (PHM), Pertamina’s subsidiary and the block’s operator, intends to drill 69 development wells this year in a bid to maintain production levels. But speaking to local media last week, PHM director Ida Yusmiati said: “PHM has so far completed the drilling of 18 wells.”

There are currently three rigs operating in the Mahakam block and PHM is waiting for additional rigs to pursue its drilling target, Ida said.

Pertamina aims to produce 3.07 bcf (86.94 mcm) per day of gas in 2018. The company wants to extract 42,000 bpd of oil and 916 mmcf (25.94 mcm) per day of gas from the Mahakam block this year.

Mahakam contains the Peciko and Tunu gas fields and accounts for the bulk of gas supplies to the Bontang LNG plant in East Kalimantan. Maintaining gas production levels in the block will hold the key to stable LNG supplies from the export project.

Pertamina took over Mahakam after the block’s production-sharing contract (PSC) expired on December 31, 2017. France’s Total operated the block with a 50% stake, while Japan’s Inpex held the remaining interest.

The two firms had entered talks with the Indonesian government about taking a combined stake of 39% in the new PSC, but reports emerged in June that Total had lost its appetite for the proposal. The Indonesian Energy Ministry’s oil and gas director-general, Djoko Siswanto, said at the start of the month that the French major was unlikely to join the PSC after it refused to pay Pertamina an unspecified participation fee. Siswanto said Inpex was still interested in staying on.

 

Edited by

Andrew Kemp

Editor

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