Pertamina Hulu Energi's Subsidiary Allocates $565M for Investment in 2016

Indonesian upstream firm PT Pertamina Hulu Energi Offshore North West Java (PHE ONWJ) -- a unit of national oil company PT Pertamina's subsidiary PT Pertamina Hulu Energi -- set aside $565 million (IDR 7.12 trillion) for total investment in 2016, the country's national news agency Antara News reported Wednesday.

The investment amount, listed in the company's Work Plan and Budget, comprised $168 million in capital expenditure (capex), while the remaining $397 million will be allocated for operating expenditure, General Manager of PHE ONWJ Irwansyah said, as quoted by Antara News.

The PHE ONWJ senior executive added that the $168 million capex will be utilized to drill three wells for $35 million and 11 workover wells for around $30 million. The company has also budgeted $63 million for pipeline replacement and $33 million for beefing up facilities.

"The source of (investment) funds (come) entirely from PHE holding," Irwansyah said.

PHE ONWJ believes that the 2016 investment will help the upstream company achieves a daily production target of 37,300 barrels of oil and up to 163 million standard cubic feet (MMscf), which is projected to be lower compared to 2015.

Last year, PHE ONWJ produced 40,031 barrels per day of oil and 178.4 million standard cubic feet per day (MMscf/d) of gas, compared to 40,000 barrels per day of oil and 175 MMscf/d laid out in the company's Work Plan and Budget, respectively.

"Target oil production this year fell mainly due to the production decline, and the number of work plans that are not economically well implemented, is associated with a decline in oil prices. The target gas production fell, primarily due to production decline," Irwansyah said.

Deputy Director of ReforMiner Institute Komaidi Notonegoro agreed that the decline in PHE ONWJ's production targets makes sense as productivity of the field has fallen, adding that the lower targets could also be due to business considerations as crude oil prices continue to weaken.

To stem the production decline, PHE ONWJ planned workover job on 11 wells.

"Three wells to be drilled this year are LESA-5, YA-4, KLB-18. Gas will be produced from fields APN, KL, GG, Echo, Bravo, Lima, Uniform," the PHE ONWJ General Manager indicated.

The company supplied gas to domestic consumers, including 90 MMscf/d to PT PLN (Persero), 50 MMscf/d to PT Pupuk Kujang, Cikampek Falkirk and 20 MMscf/d to Pertamina Refinery Unit VI in Balongan, Indramayu, West Java.

PHE ONWJ holds 53.25 percent in the ONWJ Block, located offshore north west Java, Indonesia. China's CNOOC ONWJ Ltd. has 36.7205 percent, while Orchard Energy Java B.V. and Talisman Resources (N.W. Java) hold 5 percent and 5.0295 percent, respectively.


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