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Sumatec to
Venture into Marginal Oil & Gas Sector in Indonesia
Bernama, 11 May 2005
Sumatec Resources Bhd
is entering into marginal oil and gas
field development through a wholly-owned
subsidiary, Sumatec Petroleum
Development Sdn Bhd, with the signing of
an agreement to acquire a 65 percent
interest in P.T. Petro Java Energy (PJE),
a company registered in Indonesia.
Sumatec's initial investment in the
venture will be between US$3 million
(RM11.4 million) and US$4 million
(RM15.2 million).
PJE has been invited by Indonesia's
national oil company, Pertamina, to
submit a 20-year joint operation
proposal to rejuvenate and extract oil
and gas from an onshore brown field left
over by a Dutch oil company since 1940
in eastern Java, Sumatec said in a
statement Tuesday.
The field is said to contain some 95
million barrels of oil reserves. Based
on a recovery factor of 25 percent, the
field can yield about 24 million barrels
which, if based on the current oil price
of US$52 (RM197.6) per barrel, is worth
about US$1.248 billion (RM4.742
billion).
The field was discovered in 1803 and oil
was first produced in 1905. The field
has 32 wells drilled and capped. The
highest recorded production based on
outdated technology at that time was
62,700 barrels per year in 1919. The
field has not been touched since 1940,
Sumatec said.
It added that the field is believed to
be situated in a promising oil basin
with over a dozen oil fields already
discovered and exploited.
The field which Sumatec will be involved
in is located near the site of a field
which is currently held by ExxonMobil.
The field has been drilled previously to
a depth of 300 to 400 metres only due to
outdated drilling equipment available at
that time. With existing drilling
technology, including directional
drilling, oil can be extracted from a
depth reaching 2,000 to 3,000 metres.
Production is expected to start sometime
in 2006 or 2007 with an expected initial
production of 5,000 barrels per day,
Sumatec said. The extraction is expected
to last 20 years.
The latest venture by Sumatec is part of
its diversification plans to broaden its
earnings base. The company's activities
have been largely concentrated on the
EPPC (engineering, procurement,
construction and commissioning)
business.
It recently entered into the marine
transport and logistics sector with the
acquisition of four Miri-based companies
which have a fleet of six coastal oil
tankers. The fleet has a total capacity
of 33,000 metric tonnes.
Aim of the acquisitions is to enhance
Sumatec's positioning in the energy
transportation and logistics business.
The acquisition of the shipping
companies will enable Sumatec to enter
the offshore anchor-handling tug boat
and supply boat chartering business.
Sumatec also intends to tender for
Petronas contracts and to add other
products such as crude petroleum and
clean fuel to its cargo base. It has
been in the onshore oil and gas business
for 25 years.
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