Publicly listed oil and gas firm PT Energi Mega Persada (ENRG) plans to boost its capital expenditure to US$341 million in 2018 from a mere $60 million this year to increase the development of several blocks following a significant drop in its production throughout this year.
ENRG, affiliated with politician and tycoon Aburizal Bakrie, saw its oil and gas production average at 27,800 barrels of oil equivalent per day (boepd) between January and September, down 34.27 percent year-on-year. As a result, its revenues fell by 38 percent to $242.3 million.
The downward trend was triggered by the government’s decision to terminate ENRG’s contract in the Offshore Northwest Java (ONWJ) oil and gas block in January and fully shift the operatorship to Pertamina Hulu Energi (PHE), a subsidiary of stateowned energy giant Pertamina.
Previously the block was jointly operated by PHE with a participating interest of 58.28 percent, ENRG with 36.72 percent and Kuwait Foreign Petroleum Exploration Company (Kufpec) with 5 percent.
“The loss of the ONWJ block has decreased our production and revenues by more than 30 percent,” ENRG president director lmam P Agustino said on Wednesday “Next year, we plan to boost our production by 10 percent through a number of development programs in several blocks, particularly the ones that have big potential but have yet to be exploited.”
ENRG has prepared $266 million from its own cash flow to start next year the second development phase of the Terang Sirasun Batur field in Kangean block, East Java, which produced 42 barrels of oil per day (bopd) and 118.7 million standard cubic feet per day (mmscfd) of gas throughout 2016.
Through such a plan, the firm expects to generate an additional 130 mmscfd of gas from the Kangean block starting in 2019. Furthermore, ENRG plans to allocate around $75 million to further develop the Bentu block in Riau. The block currently produces 60 mmscfd of gas, most ofwhich is delivered to Pertamina’s Dumai refinery in the same province.
“We have prepared a plan of further development [POFD] for the Bentu block so that we can produce an additional 60 mmscfd of gas from it. Hence, we expect to have a production rate of 120 mmscfd by the first quarter of 2019 at the latest,” Imam said.
In September, the government granted a 20-year extension to ENRG’s contract in the Bentu block, initially slated to expire in 2021. Hence, the company will operate the block until 2041 using the cost recovery scheme.
Moreover, ENRG has submitted a proposal to the government to extend its contract in the Malacca Strait block, slated to expire in 2020. However, when extended, the company intends to use the new gross split scheme in operating the block instead of maintaining the current cost recovery mechanism.
Then, it aims to start drilling activities at the Secanggang and Anggor fields in the Gebang block, North Sumatra, next year to boost production by an additional 60 mmscfd of gas in the future.
To improve its financial health, ENRG has announced a plan to restructure its debts Worth Rp 437.2 billion ($32.3 million) from five different creditors Greenwich lnternational, Stallion Investment, Ultrapro, PT Wira Cipta Perkasa and PT Prime Petro Services.
Jakarta Post, Page-13, Thursday, Dec 21, 2017
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