Indonesia’s state-run upstream company PT Pertamina is looking to re-engage Total and INPEX Corp. in reviving oil and gas production from the aging fields and developing new fields in the hydrocarbons-rich Mahakam Block offshore Makassar Strait.

Arcandra Tahar, the country’s junior energy and mineral resources minister, said ministry officials are in talks with Total and INPEX to divest up to 39% participating interest (PI) in the Mahakam concession as part of a new production-sharing contract (PSC).

The ministry is in favor of the duo’s re-participation in Mahakam considering its familiarity with the block’s complicated geology and long experience in reviving production from the aging seven oil and gas fields in the concession.

United Arab Emirates-based Mubadala Petroleum and PetroChina have also evinced interest in acquiring a minority interest in Mahakam.

Both Total and INPEX have confirmed the talks with the Indonesian ministry. The two companies are seeking no less than 39% PI in the gas-rich Mahakam Block they jointly developed till the 50-year PSC expired Dec. 31, 2017.

“INPEX will continue pursuing discussions, in close partnership with Total, with Pertamina and the Indonesian government authorities with the aim of participating in the block under the new PSC,” the Japanese company said.

The companies held 50% PI each in the Mahakam concession.

PT Pertamina acquired the entire PI from Total and INPEX and named its subsidiary PT Pertamina Hulu Indonesia (PHI) as the operator of the concession before divesting 10% PI to the local government in East Kalimantan.

Mahakam is still the country’s biggest gas-producing block despite a fall in production from the peak level of 197,000 bbl/d of oil and 1,700 million standard cubic feet per day (MMscf/d) of gas a few years ago. It currently pumps an average more than 50,000 bbl/d and 1,300 MMscf/d of gas.

Need Partners

Pertamina is equally interested in a partnership with the former operator due to its limitations in reviving the production from the seven oil and gas fields—Handil, Bekapai, Tambora, Nubi, Tunu, Sisi, Peciko—in the Mahakam concession. It is said that 30% of the total drilled wells in the concession are 20 years old.

The Indonesian company said the association with the former operator for the revival of production in Mahakam Block is vital considering its understanding of the geophysical complexities of the concession and the expertise developed in producing hydrocarbons from the aging fields for the last 10 years.

The French major drilled more than 2,000 wells in Mahakam Block with various types of wells based on function, architecture, completion type, lifting-mechanism and wellhead-tree technology to maintain production levels since the discovery of oil and gas in Bekapai Field in 1974.

During the operatorship, Total adopted different methods to tackle the mature field challenges in Mahakam on a field basis due to the uniqueness of every field. The revival of the Tunu Field, according to the operator, succeeded to maintain its production through lowering network pressure, lighter well architecture and lowering well spacing to re-access disconnected reservoirs.

Production from the Handil and Bekapai fields were revived through pressure maintenance, new EOR screening, 3-D seismic and intensive drilling.

PHI president director Bambang Manumayoso said the oil and gas fields in the Mahakam Block have entered Phase Four or production decline.

In the absence of any revival efforts, he said oil and gas production could drop drastically to 25,717 bbl/d and 934 MMscf/d in 2018, down from the average production of 52,000 bbl/d and 1,360 MMscf/d in 2017.

Concerned over this, PHI has prepared a $1.8 billion revival plan, which includes drilling 55 development wells, re-work in 132 wells and maintenance for 5,601 wells over three to five years.

The revival plan is targeted to produce 1,100 MMscf/d of gas and oil of 48,000 bbl/d from Mahakam by 2018, he said.

The Mahakam concession is estimated to contain proven reserves of 139 Bcm (4.9 Tcf) of gas and 57 MMbbl of oil as of 2016.

—Ravi Prasad