But Indonesia is no problem at all, says GSPC

Vol 14, PW 23 (19 May 11) People & Policy

Yemen may not be the brightest outlook for GSPC but in the Southeast Asian nation of Indonesia it’s an entirely different story.

PETROWATCH learns GSPC is gearing up to begin exploration work within the next three months at its South East Tungkal (SET) block in the Muslim-majority republic which is made up of 17,508 tiny islands and thirty-three provinces. “The consortium is finalising a tender to shoot and process 223-lkm of 2D at SET,” confirms a GSPC source.

He adds GSPC will also issue tenders to hire service providers to buy “materials” and select a contractor who can reprocess old 2D. At present, GSPC is carrying out an Environmental Impact Assessment study of the block, we hear.

GSPC operates SET with a 50.5% stake with Mumbai-based Essar Exploration & Production, which holds 49.5%. They won this block during the First Indonesia Petroleum Bidding Round in 2008.

SET is located onland in the Jambi sub-basin in south-central Sumatra and contains six separate areas totalling 2309-sq km. Under the PSC signed on November 13, 2008, GSPC and Essar must spend $13.5m over the six-year initial exploration period.

In the three-year Phase-I of this initial exploration period, GSPC and Essar have committed to spend $7m to shoot 200-lkm of 2D and drill one exploration well. SET’s annual work programme for 2011-12 envisions this work completed before April 1, 2012.

In the three year Phase-II, the consortium must spend $6m to shoot and process 100-sq km 3D and drill one exploration well. After Phase-II ends, the consortium has the option to apply for a four-year extension to the initial six-year exploration period.

GSPC and Essar have paid the Indonesian government a $1.1m signature bonus and submitted a $2m ‘performance’ bond.