MedcoEnergi seeks extension of Oman oilfields pact

MUSCAT: Indonesian oil and gas firm MedcoEnergi says it is negotiating a possible extension of the agreement for the operation of the Karim Small Fields cluster onshore Oman outsourced by Petroleum Development Oman (PDO) under a groundbreaking ‘Exploration & Production’ (E&P) Service Contract signed nearly a decade ago. Located in Shuwaymiyah in Dhofar Governorate, the Karim Small Fields (KSF) is a cluster of 18 fields owned by PDO, the Sultanate’s dominant oil and gas producer, as part of its Block 6 concession.

In January 2006, MedcoEnergi won a tender for a first-of-its-kind Service E&P Agreement to operate the cluster as a third part contract operator on PDO’s behalf. Its mandate was to arrest declining production and exploit the potential of the fields, thereby allowing PDO to focus on the development of larger and technically challenging fields within its concession.

Leveraging its skill and experience in field rehabilitation, MedcoEnergi says it has delivered consistently high production levels over the past nine years since it had signed the Service Contract.

“In 2014, the Company succeeded in drilling 30 production wells and achieved production of 16,965 barrels of oil per day (BOPD), exceeding the production target by 1,950 BOPD. The production increase was achieved through the drilling of new wells, as well as workover on existing wells,” the Jakarta headquartered international firm said in its 2014 Annual Report. Roughly a third of the output, averaging 6,038 BOPD, came from Simsim, the largest field in the cluster.

With the 10-year service contract due to expire in less than a year, MedcoEnergi says it has kicked off negotiations with PDO aimed at securing an extension of the agreement. That arrangement allows MedcoEnergi to recoup all of its costs, as well as earn a fee on the output of oil it produces from the cluster.

As third party operator of the field, MedcoEnergi drilled a total of 241 wells over the 2006 – 2014 timeframe, adding to the 115 wells that it acquired at the start of the Service Contract. A further 29 new production wells are proposed to be drilled during the course of 2015, it said.

Medco Oman LLC, the joint venture partnership that won the contract from PDO is 51 per cent owned by MedcoEnergi. The other shareholders are Oman Oil Company (25 per cent), Kuwait Energy (15 per cent), and two private Omani companies (9 per cent).

Adjoining the Karim Small Fields cluster is Block 56, which was acquired by Medco Arabia Ltd, a subsidiary of MedcoEnergi, under an Exploration and Production Sharing Agreement last November.

Covering an area of 5,808 sq km, the block is located in the productive Oman Salt Basin and is believed to contain 370 million barrels of oil in place. According to MedcoEnergi, three hydrocarbon discoveries have already been identified with a further six potential prospects being looked at as well.

“The plan for 2015 will begin with geological and geophysical studies, prior to seismic work and exploratory drilling in 2016,” the company added in its Annual Report. MedcoEnergi holds the majority participating interest (75 per cent) in the block, with Intaj LLC (25 per cent) as its local partner.


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