ASEAN KEY DESTINATIONS
Medco redirects gas delivery to Arun-Belawan pipeline
Jakarta-listed PT Medco Energi Internasional is planning to redirect its gas delivery from a field in Aceh via the 370-kilometer Arun-Belawan pipeline, which passes through Aceh and North Sumatra.
The delivery of the gas was initially handed to fertilizer company PT Pupuk Iskandar Muda (PIM), but Medco president director Lukman Mahfoedz said his company had reached a deal with PIM, as well as state oil and gas giant PT Pertamina, over the redirection plan.
“The plan is [also] supported by SKKMigas [the Upstream Oil and Gas Regulatory Special Task Force] and the Energy and Mineral Resources Ministry. We are currently drafting the gas sales agreement,” Lukman said. The agreement is expected to be completed by the end of August.
Under the new program, Medco, the operator of Block A, will send 58 million standard cubic feet per day (mmscfd) of gas to the Arun-Belawan pipeline, from production in Block A’s Alur Rambong, Alur Siwah and Jalur Rayeu fields. The gas will then be delivered to customers in North Sumatra.
The new delivery scheme was expected to help Block A’s development progress and deliveries would begin by the end of 2016, according to Lukman.
“This program will reduce the volume of gas needed for compression due to the considerable distance between the location of Block A and PIM. PIM will also benefit from more competitive transportation costs,” he added.
PIM will still receive gas from Pertamina’s regasification plant in Arun to the same amount that had previously been agreed with Medco, namely 54 mmscfd.
Medco is currently developing the Block A gas field, which will have a total production capacity of 63 mmscfd. The other buyer for the block’s remaining gas is state-owned electricity firm PT PLN, which will use around 5 mmscfd to feed its plant in the eastern part of Aceh.
Lukman declined to reveal the price of the 58 mmscfd gas to be sold via Arun-Belawan pipeline, which is currently being developed by Pertamina’s subsidiary, PT Pertamina Gas (Pertagas).
Pertagas previously said that it was seeking an additional supply of gas to be delivered through the 370-km pipeline.
The Arun-Belawan pipeline has been specifically designed to deliver gas from the Arun regasification plant, which will receive liquefied natural gas (LNG) from the Tangguh plant in Papua. The pipeline will still have enough capacity to receive more gas than that from the Arun plant. Therefore, the company is seeking additional gas from other nearby fields.
Work on the project was 90 percent complete and was expected to be finished in October, according to Pertagas president director Hendra Jaya.
Apart from the Block A gas field, Pertagas is also eyeing supplies from the Jambu Aye Utara field, which is operated by Eni Krueng Mane Ltd.
Hendra did not reveal the potential amount of gas that his company would obtain from the fields.
“The pipeline is designed with a capacity for 200 mmscfd, but it can be increased to 24 inches in diameter to allow for up to 400 mmscfd,” Hendra said.
He added that Medco was also working on its Matang and Kuala Langsa fields in Block A. He said the company would carry out a thorough drilling appraisal to determine the proven gas reserves in Matang, while Kuala Langsa is estimated to have potential gas reserves of 10 trillion cubic feet.
“We are sure to attract buyers, as North Sumatra’s industries have a high need for gas. So does PLN. Infrastructure won’t be a problem, either, as Arun-Belawan is on target for completion,” Lukman said.
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