Expect More BILLIONS into the drain!
<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published July 4, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Temasek looks to its first gusher
Push into resources investments off to good start with winning of Indonesian oil and gas exploration deal
By RONNIE LIM
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TEMASEK Holdings has finally made its foray into the oil and gas business by clinching its first-ever exploration rights - an Indonesian concession in West Belida onshore Sumatra.
This comes a year after it first set up Orchard Energy, its oil and gas exploration and production (E&P) subsidiary. Things have started moving now that Orchard has an experienced team in place, led by 30-year E&P veteran Tony Tan who crossed over from Singapore Petroleum Company in January to be its CEO.
Orchard Energy was among 11 winners - together with 'big boys' like ExxonMobil and Hess Corporation - in the latest round of oil and gas exploration rights in eastern Indonesia. Its wholly-owned subsidiary, Orchard Energy (West Belida) Limited (OEWBL) signed the production sharing contract (PSC) with Indonesia in May. It is partnering PT Bayu Energy Lestari, an Indonesian investment and consultancy company, for the PSC, although OEWBL - with a 94 per cent working interest - will operate the concession block.
Under the latest round of PSCs, besides paying 'signing bonuses' worth a total US$21.6 million to the government, the 11 winners have committed to invest a total of US$189 million over the next three years in their PSC areas.
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</TD></TR></TBODY></TABLE>Indonesia is pushing to produce more oil from ageing fields. In the first quarter of 2009, production there averaged 946,000 barrels per day, down 14,000 b/d from the government's target of 960,000 b/d. Last year Indonesia withdrew from the Organisation of Petroleum Exporting Countries due to declining production and increased imports of oil.
Orchard's three-year investment commitment of US$5.76 million for the West Belida PSC is relatively small compared with what some of the others have committed. It may well have to cough up more funds later, one industry source feels.
ExxonMobil has, for instance, committed US$40 million over three years to explore a block in offshore Papua, while Hess Corp, the fifth biggest US oil producer, is investing US$26 million to explore the South Sesulu block, off Kalimantan.
Explaining how the three-year investment commitments work, one oilman said: 'Typically, in the first year, the PSC operator will re-process or analyse earlier field data before shooting his own 2-D and 3-D (three-dimensional) seismic in the second year.
'Actual exploration drilling usually starts in the third year, and in Indonesia, it will cost on average US$30 million to US$40 million to drill a few wells offshore,' he said. But the operator can, however, decide to abandon the PSC before actually doing any drilling if the seismic data shows an unpromising field.
Industry sources say that Orchard's investment commitment will also cover general administrative costs, like setting up office in Indonesia. This is something which OEWBL has done, setting up shop at Indonesia Stock Exchange Tower 2 in Jakarta, with Ronald Frederik appointed as its acting general manager.
Orchard Energy was set up by Temasek last April as part of the investment company's push into resource investments.
Over the last year, the outfit has assembled a team of experienced E&P staff, including engineers and geophysicists who had previously worked in Chevron and Unocal Corporation, as well as commercial and financial officials, including several from SPC previously. Its board also includes old industry hands from ExxonMobil and Shell.
Indonesia is one of its focus areas in the Asia-Pacific, with its other target countries being Vietnam, Malaysia, Thailand, Australia and China. The company said that it will grow its business by acquiring both producing assets and exploration acreage. One industry observer said that with Temasek's financial muscle, Orchard could easily have bought into a producing oil/gas field, although the West Belida exploration concession is a starting point.
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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published July 4, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Temasek looks to its first gusher
Push into resources investments off to good start with winning of Indonesian oil and gas exploration deal
By RONNIE LIM
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>TEMASEK Holdings has finally made its foray into the oil and gas business by clinching its first-ever exploration rights - an Indonesian concession in West Belida onshore Sumatra.
This comes a year after it first set up Orchard Energy, its oil and gas exploration and production (E&P) subsidiary. Things have started moving now that Orchard has an experienced team in place, led by 30-year E&P veteran Tony Tan who crossed over from Singapore Petroleum Company in January to be its CEO.
Orchard Energy was among 11 winners - together with 'big boys' like ExxonMobil and Hess Corporation - in the latest round of oil and gas exploration rights in eastern Indonesia. Its wholly-owned subsidiary, Orchard Energy (West Belida) Limited (OEWBL) signed the production sharing contract (PSC) with Indonesia in May. It is partnering PT Bayu Energy Lestari, an Indonesian investment and consultancy company, for the PSC, although OEWBL - with a 94 per cent working interest - will operate the concession block.
Under the latest round of PSCs, besides paying 'signing bonuses' worth a total US$21.6 million to the government, the 11 winners have committed to invest a total of US$189 million over the next three years in their PSC areas.
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Orchard's three-year investment commitment of US$5.76 million for the West Belida PSC is relatively small compared with what some of the others have committed. It may well have to cough up more funds later, one industry source feels.
ExxonMobil has, for instance, committed US$40 million over three years to explore a block in offshore Papua, while Hess Corp, the fifth biggest US oil producer, is investing US$26 million to explore the South Sesulu block, off Kalimantan.
Explaining how the three-year investment commitments work, one oilman said: 'Typically, in the first year, the PSC operator will re-process or analyse earlier field data before shooting his own 2-D and 3-D (three-dimensional) seismic in the second year.
'Actual exploration drilling usually starts in the third year, and in Indonesia, it will cost on average US$30 million to US$40 million to drill a few wells offshore,' he said. But the operator can, however, decide to abandon the PSC before actually doing any drilling if the seismic data shows an unpromising field.
Industry sources say that Orchard's investment commitment will also cover general administrative costs, like setting up office in Indonesia. This is something which OEWBL has done, setting up shop at Indonesia Stock Exchange Tower 2 in Jakarta, with Ronald Frederik appointed as its acting general manager.
Orchard Energy was set up by Temasek last April as part of the investment company's push into resource investments.
Over the last year, the outfit has assembled a team of experienced E&P staff, including engineers and geophysicists who had previously worked in Chevron and Unocal Corporation, as well as commercial and financial officials, including several from SPC previously. Its board also includes old industry hands from ExxonMobil and Shell.
Indonesia is one of its focus areas in the Asia-Pacific, with its other target countries being Vietnam, Malaysia, Thailand, Australia and China. The company said that it will grow its business by acquiring both producing assets and exploration acreage. One industry observer said that with Temasek's financial muscle, Orchard could easily have bought into a producing oil/gas field, although the West Belida exploration concession is a starting point.
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