Pertamina opens up new oil and gas well despite weak oil prices

Pertamina Hulu Mahakam (PHM), a subsidiary of state-owned oil company Pertamina, is opening up a new oil and gas field in the country to find new reserves despite a sharp fall in crude oil prices.

PHM began on May 21 drilling a new oil and gas exploration well in the Peciko Field, Mahakam Block, which is located off the coast of East Kalimantan, said the company in a statement on Monday (25/5).

The company expects to finish drilling the well, which will be up to 2,700 meters deep beneath the sea surface, within 90 days. “This is part of our effort to discover new reserves in maintaining operation and production levels in the Mahakam Block,” wrote the company in a statement.

PHM did not mention how much oil and gas it expected from the new well. However, PHM yielded 153,477 barrels of oil equivalent per day (boepd) last year, becoming Indonesia’s third-most-productive oil and gas company in 2019.

Oil and gas reserves in the Mahakam Block are confined to thousands of small, isolated, underground pockets, which means PHM has to continually drill new wells in existing reserves, on top of drilling for new reserves, in maintaining production levels. The company drilled 127 wells last year.

Furthermore, as a national oil company (NOC), Pertamina is obligated to uphold Indonesia’s upstream oil and gas industry in the name of domestic energy security even when less profitable, Pertamina president director Nicke Widyawati told lawmakers on April 4.

“Most NOCs consistently spent between 12 and 35 percent of their upstream budget on exploration,” said senior energy analyst Huong Tra Ho of consultancy Wood Mackenzie in a statement dated May 20.

“This is significantly higher than the majors’ [private oil companies] average spend of 8 percent of the upstream budget on exploration.”