The PSC covers an area of around 1,700 sqkm in the KutaiBasin, East Kalimantan. Preliminary studies on the block suggest that it has a CBM resource potential of at least 4 trillion cubic feet of gas.
The PSC overlays the same acreage as the existing Sanga-Sanga conventional PSC, which has gas production infrastructure already in place with access to markets internationally through the Bontang LNG plant as well as to local customers. This existing infrastructure is expected to allow rapid development of CBM to production.
Andy Inglis, chief executive of exploration and production at BP, said: “BP is committed to bringing our technology and experience to help unlock Indonesia’s great coalbed methane potential. Alongside the Tangguh LNG project in Papua, this important new access to Sanga-Sanga’s CBM resources will allow BP to continue to grow our LNG production in Indonesia and underlines Indonesia’s continuing significance to BP.”
William Lin, president of BP Indonesia, said: “Combining BP’s deep CBM expertise with VICO’s long experience will open a new chapter for Sanga-Sanga, translating its significant CBM potential into material levels of gas production. With VICO’s existing knowledge and infrastructure, we expect production to begin rapidly – in a very few years – and its supply to Bontang will enable Indonesia to become the world’s first CBM-to-LNG producer.”
The Sanga-Sanga CBM PSC was awarded to a consortium comprising VICO (7.5% and operatorship), BP (26.25%), ENI (26.25%), VIC (15.62%), Opicoil (20%) and Universe Gas and Oil (4.37%). VICO and VIC are joint ventures owned 50:50 by BP and ENI, giving each company a total 37.8% interest in the contract.
The award of the contract follows two years of joint efforts by VICO and its partners, including a joint study of the PSC area. An appraisal programme is expected to determine the CBM production capacity of the block. The consortium will pay a signature bonus of $4m, and will now start work towards delivering the $38m work programme commitment.
