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Indonesia Oil & Gas Fields - North Sumatra - Mobil & Arun LNG.

North Sumatra, including its offshore, is mainly a gas producing province, with oil produced primarily from Tertiary clastics in small sized fields. Most of the hydrocarbons in this region are located onshore. But large gas deposits have been found in reefs offshore similar to that of Arun, in Aceh Province which is the northernmost part of Sumatra and now affected by anti-regime riots. Arun is a super-giant gas field and one of the world's largest suppliers of LNG, though now it is depleting. It was found in November 1971 by Mobil Oil Indonesia, then with reserves of more than 14 TCF of gas and 750m barrels of condensates. Its development began in late 1973 after Mobil and Pertamina secured long-term LNG sales contracts with Japanese buyers. The field lies in Mobil's Aceh Block offshore about 20 miles from the Arun LNG terminal and about 150 miles north of Medan, the third largest city in Indonesia. The field covers about 35 sq miles and has had a thickness of 1,100 feet. It is reservoired in a pinnacle limestone reef. To mark its 20th anniversary on Nov. 18, 1991, Mobil raised Arun production to a peak of almost 1,100 MCF/day and more than 120,000 b/d of condensates. Since early 1992 production has declined. The field will deplete in the next decade. The decline was evident with the fall in Arun's condensate yield, which in 1994 reached 80,000 b/d and was expected to fall to 50,000 b/d by 2000. The field's gas production could last until 2010. While Pertamina had a tough stand on Mobil, the state concern had in 1991 signed a contract with Chevron guaranteeing it 40,000 b/d of condensate supply from Arun for 10 years beginning from 1995. Chevron now is using the condensate as a feedstock in its petrochemical plant at Banda Aceh. This deal left the clients of both Mobil and Pertamina with very limited quantities of condensate. As part of hard bargaining between the US major and Pertamina over the renewal of Mobil's PSCs, as Total had done a few years earlier concerning its East Kalimantan blocks (see below), Mobil in early 1992 began negotiating with Qatar for partnership in large gas developments for LNG export. That followed BP's withdrawal from the Qatargas venture. Mobil was introduced to Qatar's QGPC by Mitsui & Co., and eventually it joined Qatargas and went into a larger LNG venture with QGPC called Rasgas (see LNG survey serialised in 1994 Volumes 42 and 43). After much bargaining, Mobil's PSC with Pertamina was renewed until 2018. The terms were encouraging enough for the US major to embark on a massive gas exploration programme. By mid-1993, Mobil had made four major gas/condensate discoveries on its Aceh block with recoverable reserves proven at 1.8 TCF. Since then, discoveries have raised the proven reserves there to about 3.5 TCF. The fields are being developed. Two of these, with 2 TCF of reserves, including the Pase A, went on stream in 1997/98 and the gas feeds the Arun LNG complex. The third field, NSO-A 100 km from Arun, will be on stream by mid- 1999 to produce 450 MCF/day and supply the LNG complex. Mobil owns 30% of the 12m t/y complex, PT Arun NGL, with 55% held by Pertamina and the rest held by Japan-Indonesia LNG Co. (Jilco). In July 1994, Mobil took a 50% interest from Inpex (Indonesia Petroleum of Japan) in the North Aceh Block, off the northern tip of Sumatra island and adjacent to Mobil's Aceh tract. This is rich in gas and condensates. Inpex had drilled five exploration wells and, at Jambu Aye Utara-1, tested important gas/condensate quantities. The area now is operated jointly by Inpex and Mobil. A deep-water exploration programme, launched in the autumn of 1994, may eventually result in major discoveries. The gas will feed the Arun LNG complex. (Inpex has other interesting blocks in Indonesia in partnership with Total and Oryx Energy). In July 1996, Mobil got 26% in the $42 bn Natuna gas development and LNG project. Among other blocks, Mobil has an offshore tract in the Strait of Madura where it found a big gas field in 1989. Mobil is negotiating a 51% stake in the Cepu block in Central Java, which used to be controlled by a son of ex-president Suharto through his company Humpuss Patragas. In late 1998 Pertamina took the 51% from that company and offered it to foreign firms. Humpuss had signed a TAC in 1990 to develop Cepu.
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Publication:APS Review Gas Market Trends
Geographic Code:9INDO
Date:Mar 8, 1999
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