Petronas expanding ops in Indonesia

KUALA LUMPUR: Despite the falling oil prices, Petroliam Nasional Bhd (Petronas) is expanding in Indonesia by increasing oil production and it has no plans to cut capital expenditure in the country next year.

Petronas Carigali Indonesia country chairman Hazli Sham Kassim said its operations were poised to see an increased production of 35,000 barrels of oil equivalent per day (boepd) next year from the current 31,000 boepd.

“This growth would be contributed by new wells expected to be drilled in the Ketapang block. We have drilled more than we expected in that development block this year to a total of three wells.

“So far, in Indonesia, we have three blocks in production, four at the exploration stage and two at development stages,” he told a media briefing at the 8th International Petroleum Technology Conference here yesterday.

Petronas had ventured into Indonesia in 2000 with nine production sharing contracts (PSCs) with Pertamina, Exxon Mobil and Petro China, amongst others.

It owns a participating interestin the Jabung, Natuna and Madura PSCs.

For the Ketapang and Muriah block, Petronas in 2012 inked a gas sale and transportation agreement.

On the current low oil price’s impact on upstream operations besides lowering its margins, Hazli said on the positive side, he could see some decrease in the price or cost equipment such as exploration wells.

“Usually, it takes about 12 to 24 months of lag time for the price of oil and gas (O&G) infrastructure and equipment to come down after the dip in oil prices.

“But this time around, because of the sharp fall of the commodity, the lowering of prices of O&G equipment came much earlier,” he pointed out.

Alongside its upstream operations, Petronas is also involved in the downstream business in Indonesia in marketing and the trading of industrial fuels and lubricant products.

Currently, its subsidiary PT PLI Indonesia, which focuses on lubricant products, is doing quite well and aims to be among the top-five players in the country by 2020.

“Petronas Chemicals Group Bhd also has a representative office in Indonesia to promote our petrochemical products,” said Hazli.