SPC to embark on full-scale natural gas venture in Q4

It will commercialise gas production by selling to Indonesian power station
Ronnie Lim, Business Times 7 Apr 09;

SINGAPORE Petroleum Company is set to embark on its first full-scale natural gas venture in the fourth quarter of this year when it commercialises gas production - selling it to an Indonesian power station - from its Kakap field there.

Listed SPC, which is increasingly investing in upstream exploration and production assets to diversify its earnings base, said in its just-released 2008 annual report that 'gas production from Oyong remains on schedule and is expected to commence in 2009'.

Oyong's PSC (production-sharing contract) partners started work last year on the field's second phase of development to commercialise the gas reserves there.

This follows the first phase development of Oyong which was focused on oil, with the Indonesian field currently giving SPC an average 2,527 barrels per day (bpd) of oil.

SPC chief executive Koh Ban Heng earlier told BT that the expected gas flow of 60 million standard cubic feet daily (mscfd) from Oyong will give SPC about 24 mscfd, or another 4,000 bpd of oil equivalent.

Under a gas sales agreement signed earlier with PT Indonesia Power, the gas will be transported via a 55km pipeline to an onshore gas processing facility adjacent to the Grati power station in East Java.

Next up for gasfield development will be the nearby Wortel field there, where 'first gas production is expected in 2011', SPC said.

Development of the Wortel gasfield 'is in progress, pending the approval of the plan of development by the Indonesian authorities', it added.

SPC said that 2008 oil/ gas production was strong, with its four producing assets in China and Indonesia yielding an average net production of 8,475 barrels of oil equivalent per day - of which over half came from its offshore fields in China's Bohai Bay.

After royalties, this gave SPC a net 6,600 bpd - 90 per cent of which comprises oil.

The remainder is gas from its Kakap PSC. This was commercialised and sold to the Indonesian government, which in turn supplies it to Singapore through the West Natuna pipeline.

SPC added that in the first half of this year, it plans to carry out exploration drilling at Block 101-100/04 in Vietnam, and in Australia at Block T/47P, about 200 km offshore from Melbourne, starting next year.

The company saw results from its upstream push last year, when exploration and production accounted for about 40 per cent of the company's after-tax earnings.

Mr Koh also got a 20 per cent salary raise last year, as his remuneration came to $3 million-$3.25 million, up from $2.5 million-$2.75 million in 2007, the annual report showed.