Singapore-listed GSS Energy has, through its subsidiary, PT Sarana GSS Trembul (PT SGT), entered into an Operation Cooperation (Kerja Sama Operasi) Agreement with Indonesia’s state-owned oil and gas company, PT Pertamina EP for the production of petroleum, including oil and gas, in the Trembul Operation Area.
The area is of 47.6 sq km. According to a Qualified Person’s Report (QPR) conducted in 2015, the area is estimated to have 24.3 million stock tank barrels of contingent resources at depths up to 800 metres; no estimate has been done beyond this depth.
PT SGT has been contracted by Pertamina EP to assist with the production of petroleum, including oil and gas, in the area for 15 years.
Production shall commence upon the submission of a US$1.5 million bank guarantee to Pertamina EP for the initial commitment period of 3 years.
The total commitment for the work programme over the initial 3 years is anticipated to be US$7.9 million.
Under the agreement, there is no minimum level of production required. Pertamina EP will retain the right to market and sell all the petroleum produced in the area.
|“Instead of making new explorations, we prefer to operate an old field like Trembul, which has been proven to produce oil during the Dutch colonial era.”
-- Bambang Mulyadi, president director, SGT
PT SGT may transfer the rights and obligations of the agreement if it has completed its work programme for the initial 3 years and received Pertamina EP’s approval.
The agreement entitles PT SGT to 23.5% of the petroleum and 31.4% of the natural gas produced in the area, after accounting for operating costs.
In addition, PT SGT will be able to recover all its operating costs from the petroleum produced under Indonesian regulations governing cost recovery for such operation cooperation agreements.
|Net asset value
|Source: Bloomberg, Company
Sydney Yeung, Group CEO of GSS Energy, said, “Our Group is delighted to announce the signing of the Operation Cooperation Agreement with Pertamina EP. The team’s effort and dedication in the past year made the securing of the contract possible. We would like to express our appreciation to all working parties for making this milestone possible.
"This accomplishment is in line with our Group’s strategy to grow our oil and gas operations. Reaching production in the Trembul Operation Area will be our Group’s next objective and priority. The commencement of production will improve our oil and gas business tremendously. Our Group is fully committed to making this project a success and will continue to align and implement our oil and gas strategy according to the Indonesian government’s energy initiatives.”
Reuters reported that the 3-year initial program consists of plans to do 3-D seismic surveys and drill four wells up to a depth of 1,000 metres with production capacity of 200 barrels of oil per day each. Bambang said in the fourth year, the company would start to drill deeper wells up to a depth of 2,700 meters with production capacity of at least 1,000 barrels of oil per day.