Genting Oil Submits Draft Plan of Development for Kasuri Block
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Malaysian-based oil company Genting Oil Kasuri has submitted a proposed Plan of Development (PoD) for oil fields in the Kasuri Block to the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas). The company will be allowed to start exploitation activities in the oil and gas block if SKK Migas approves the proposal.
SKK Migas Head of Public Relations Taslim Z. Yunus said that Genting had submitted the proposal a few weeks ago. Because SKK Migas is in the process of discussing the proposal, Taslim refused to provide any details about PoD, including the volume of oil and gas reserves and the company’s production capacity
“[The proposal] is still being reviewed,” Taslim told Katadata on Tuesday (16/8). (Read: SKK Migas Urges Genting to Submit Development Proposal)
Genting Oil had to submit a PoD for the Kasuri Block immediately because the oil and gas block’s exploration period will end soon. “If I am not mistaken, the exploration period expires in 2017 or 2018,” said SKK Migas Head of Public Relations on 23 March.
Government Regulation No. 35/2004 on Upstream Oil and Gas Business Activities says that the exploration period expires after six years, but can be extended for a further four years on the request of the contractor.
The extension will be provided as long as the contractor managed to fulfil minimum requirements stated in the production sharing contract. If the contractor fails to discover any oil or gas reserves during the exploration period, all of its work area must be handed back to the government. (Read: Pricing Hinders Kasuri Block Development Plan)
Genting actually submitted a request to discharge the exploration stage around September or October last year, to allow the company to submit a PoD proposal.
The SKK Migas however, refused Genting Oil’s proposal because according to SKK Migas, Genting must drill one or two new wells.
The additional wells are needed because the structure of oil and gas reserves in Kasuri block varies. Some of have good structure, while others are less than optimal. One structure in the Kasuri Block is even considered to be a part of the Tangguh Block (Read: SKK Migas Says BP Interested in Managing Kasuri Block)
Therefore, according to SKK Migas, this structure should be in one PoD proposal, particularly as most structures in the Kasuri Block are located in remote areas. However, with the current number of oil wells, the block is not economic and therefore new wells are needed.