Indonesia’s state energy firm Pertamina plans to spend $700 million on the upkeep of its offshore Mahakam oil and gas block in 2018 to maintain production, a company official said on Nov. 2.
Pertamina is set to take over as the block’s main operator on January 1, 2018 from Total E&P Indonesie, a unit of French major Total SA (NYSE: TOT), and Japan’s Inpex Corp.
Syamsu Alam, Pertamina’s upstream director, said the company was “concerned about managing production.”
“From our evaluation of drilling and maintenance of facilities, we estimate [we will] spend $700 million,” Alam told a news conference, referring to 2018.
“With [capex] as big as that, we hope to be able to maintain production”" he added.
Total expected Mahakam’s gas output to drop to 1.43 billion cubic feet per day in 2017 and oil production to 53,000 barrels per day, both down from the block’s 2016 production levels, it said December 2016.
Pertamina did not provide production estimates for 2018.
In May, Total and Inpex proposed taking a 39% stake in the new production sharing contract for the block, but no progress has been made on those talks.
Pertamina will also have to sell 10% of the block to the government of East Kalimantan province, officials have previously said.
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