Bontang LNG plant may lose 2 cargoes this year

The Jakarta Post | April 17, 2012 | Rangga D. Fadillah

Upstream oil and gas regulator BPMigas reported that the decline in gas production at the Mahakam block in East Kalimantan might cause the Bontang liquefied natural gas (LNG) plant to lose between 18 and 20 cargoes this year.

The block produced only 1,800 million standard cubic feet of gas per day (mmscfd) from the target of 2,020 mmscfd, which meant that the gas supply for the LNG plant decreased significantly, said BPMigas operation deputy Rudi Rubiandini on Monday.

“Total E&P Indonesie [operator of the Mahakam block] said the decline was caused by a problem with their rig at the Tunu field. But after we studied more closely, there was the possibility that the reservoir had aged so that production fell,” he explained in a limited media interview at his office in Jakarta.

He continued saying that Total had to conduct more studies to identify the real causes of the production decline before determining its course of action. If the problems were technical, the company had to take all measures to increase production over the rest of the year so that the target could be reached, he added.

“But, if the problem is an aging reservoir, it is natural, so all we can do is ensure that the decline is not that significant,” Rudi said.

The decline started in July last year.

Despite the decline, Rudi assured that the Bontang LNG plant would be able to fulfill its export commitments to buyers. The decline would influence the amount of LNG produced to be sold in the spot market, he said.

This year, the plant is expected to produce 15.35 million tons of LNG or equal to 271 cargoes, including the allocation for the spot market. Output was 16.48 million tons or 313 cargoes last year. Plant capacity is 22.5 million tons per annum (mtpa).

PT Badak NGL president director Hanung Budya earlier revealed that this year the plant’s production might be below the target because the supply from gas producers, including Total, was estimated to only reach around 2,000 mmscfd from the target of 3,300 mmscfd.

In addition to Total, the plant also receives gas supply from Virginia Indonesia Company (Vico) and Chevron. Around 82 percent of the supply comes from the Mahakam block. The participating interest of the block is owned by Total and Japan-based Inpex Corporation with share composition of 50 percent each.

The contract for the block was signed in March 1967 for a 30-year period. The contract has been extended for a period of 20 years, which will end in March 2017.

Total president director Elisabeth Proust said the production decline was natural because the block’s reserves had been exploited by around 70 percent. She claimed the company was doing its best to fight the decline by taking all necessary measures.

“We’ll mobilize all resources to boost production at the block to the maximum level,” she said.

The company has set aside US$2 billion for capital expenditures this year.

http://www.thejakartapost.com/news/2012/04/17/bontang-lng-plant-may-lose-2-cargoes-year.html