Spanish oil and gas firm Repsol SA, operator of the Sakakemang block in South Sumatra, will revise the existing gas sale agreements due to much lower reserves than previously anticipated following disappointing drilling results, according to a top official of upstream oil and gas authority SKK Migas.
“Yes, there will definitely be amendments needed. This is changing because the capacity has changed,” said SKK Migas Chairman Dwi Soetjipto on Wednesday as quoted by Kontan.
Gas reserves at the Sakakemang block were previously estimated at more than 1 TCF, but as the ensuing drilling of wells showed disappointing results, the reserves are now estimated at only 350 BCF, Dwi said.
Talks between Repsol and the potential off-takers for the amendment of the gas sale agreements are currently in progress, Kontan said.
Read also : Repsol delays Sakakemang EPC contractor selection
Dwi, however, said that despite the much lower reserves, the Sakakemang block development project remains economical as gas production from the Kaliberau field in the block will be integrated with
with production facilities of the nearby Medco-operated Corridor block as well as with facilities for gas distribution to Singapore and West Java.
“Sakakemang can connect to ConocoPhillips, connect to Singapore, connect to West Java. So there are no issues related to potential buyers," explained Dwi.
A number of companies including IDX-listed gas distribution firm PT PGN Tbk and PT Pertamina Hulu Rokan have previously signed deals for the off-take of gas from the Sakakemang project. Production from the Sakakemang block was originally expected to start in 2024-2025.
Repsol holds a 45 percent interest in the Sakakemang block, while Malaysia’s Petronas holds another 45 percent interest, and Mitsui Oil Exploration Co. Ltd holds the balance.
Editing by Reiner Simanjuntak
