INDONESIA - Chevron - East Kalimantan.

Having acquired Unocal of the US in 2005, Chevron in October 2006 said it was to invest $6 bn over four years to develop Unocal's offshore oil and gas field in East Kalimantan. Unocal, whose PSC was extended in 1991 for another 20 years, has several oil and gas fields in East Kalimantan, onshore and offshore. The Merah Besar and Janaka fields in the Greater Merah Besar block of the Kutei Basin went on stream in 2004 with a capacity of 100,000 b/d. Their oil is similar in quality to the 39[degrees] API, low-wax Attaka grade. Its oilfields include Attaka (found in 1970 at 7,500 ft and by the mid-1980s producing 50,000 b/d), Melahin and Kerindingan (both found in 1972 at 11,150 ft and producing heavier oil). Fields producing gas supplied to the Bontang complex include Attaka and Mutiara. Unocal in 1982 found a big gas field at Kerenden, 225 km west of the remote Balikpagan field. The 10,000 b/d Mahoni oilfield off East Kalimantan has been on stream since October 2000.

West Seno field, offshore, is producing 60,000 b/d. West Seno is in 1,050m of water, the first deep-water field development in Indonesia, on stream since April 2003. The field also produces 150 MCF/d of gas. West Seno, with reserves of 320m barrels oe, is in the Makassar Strait PSC block held 90% by Unocal and 10% by Pertamina. Unocal has made several oil and gas discoveries in this basin (gmt10IndnsFieldsMar7-05).

Natuna: There are several offshore oil and gas fields in Natuna, an archipelago in the South China Sea rich in hydrocarbons. The oilfields in West Natuna have a total capacity of about 170,000 b/d, down from 190,000 b/d in early 2005 and 215,000 b/d in early 2003.

The main operator in West Natuna is ConocoPhillips (CP), which produces 90,000 b/d, down from 100,000 b/d in early 2005 and more than 110,000 b/d in early 2003, from Belida field and nearby structures in Block B, and holds 40% in a partnership with Inpex (35%) and Chevron (25%). Block B's recoverable liquid reserves are 260m barrels of oil, condensate and LPG. CP's local unit, Gulf Indonesia, operates the Kakap Block and has the 70,000 b/d KG and KRA fields, in partnership with Pertamina and other firms. Premier Oil of the UK (28.67%) operates in Block A which has the 10,000 b/d Anoa field (15,000 b/d in early 2003) and a major gas field. Its partners are KUFPEC of Kuwait (33.33%), Amerada Hess (23%) and Petronas (15%). These three blocks contain about 5 TCF of recoverable gas. They began exporting gas to Singapore on Jan. 3, 2001 through a 650 km marine pipeline from the fields to Singapore's Jurong island (see Vols. 56 & 60, No. 10).

(State-owned Kuwait Foreign Petroleum Exploration Co (KUFPEC) in September 2006 sold 51% of its stake in the Seram oilfield to China Setec Seram Energy Ltd. and another 16% to Kuwait's Gulf Petroleum Investment Co. KUFPEC Chairman Bader Khashti was then quoted as saying the deal was aimed at reducing the size of the risk on KUFPEC which had previously owned 97% of the field. It was a high proportion and made the company almost single-handedly bear all risks associated with investing in the field. KUFPEC now reserves about 30% in the field which produces about 5,000 b/d of oil. The Seram oilfield has been estimated to contain gross oil reserves of about 39m barrels as of December 2005).

ConocoPhillips is exporting 100 MCF/d of Block B gas to Malaysia through another marine pipeline from the Hang Tuah offshore production platform to Petronas' Duyong platform in Malaysian territorial waters. Under a 20-year contract signed in March 2001, Block B supplies will rise to 250 MCF/d from 2007. Petronas received first gas on Aug. 8, 2002 (see Gas Market Trends No. 11).

Balanak and other Block B fields, including Kerisi and Hui, have been developed under a $2.5 bn fast-track programme to recover 1.4 TCF of gas and 150m barrels of liquids including LPG. Kerisi and the nearby Hiu have a 20-slot wellhead platform and an unmanned minimum facilities platform and some infield and inter-field pipelines. Water depth at Kerisi is 89 metres. Belanak field is producing LPG from a floating temporary FSO. The field will have a new major FSO for LPG storage and offloading by August 2008. Belanak's reserves are about 550 BCF of gas and 100m barrels of liquids. JGC of Japan got the $117m contract to design the LPG production facilities.

Premier has developed Block A's Gajah Baru (New Elephant) gas field. This has a gas processing platform, with the gas exported to Malaysia since late 2004. The field also has topsides with gas treatment and compression facilities capable of processing some 135 MCF/d of gas, a supporting sub-structure, and a 10-inch marine pipeline tying into ConocoPhillips' system. Block A gas deliveries to Petronas are under a 1 TCF contract.

The ExxonMobil Natuna Operation: One of the fields in the East Natuna Sea, still disputed with Vietnam (and China has hinted a claim over this archipelago) is called L in the D-Alpha Block. This is the one to be developed by ExxonMobil in a $42 bn project to produce up to 15m t/y of LNG and gas to be supplied by marine pipeline to Thailand and other markets. The field has about 210-250 TCF of gas in place. But more than 70% is CO2.

Only about 46 TCF of methane and other gases can be exploited. L field was discovered in 1973 by Agip, which held the D-Alpha Block in equal partnership with Tenneco and Phillips. The Italian company and its partners sold the block to Exxon in 1979 (see the background in Vol. 52, No. 10, of 8/15 March 1999).

For years, ExxonMobil and Pertamina/Jakarta have been squabbling about this field; but the US super-major still believes it can hold D-Alpha Block. In the latest swist in hard bargaining between ExxonMobil and Pertamina, the state-controlled company on Feb. 16, 2007, announced that Statoil of Norway might join it to exploit the block. Pertamina President/Director Ari Soemarno was on Feb. 16 quoted as saying: "It is one of the possibilities and there is opportunity for co-operation". However, ExxonMobil then insisted its PSC for this remained valid. In 2006, Jakarta and Pertamina threatened to take back the block from ExxonMobil if it did not start work by January 2007 and held talks with other potential partners. Jakarta continues to negotiate with ExxonMobil over this.