The new production sharing contract for the development of the Menzel Lejmat Nord block in the Sahara desert was signed by Pertamina's upstream subsidiary Pertamina Internasional EP, Algerian state oil company Sonatrach and Repsol Exploracion 405A, a unit of Spanish energy company Repsol. The signing ceremony was held in Sonatrach's headquarters in Algeria on Thursday.
The new contract is an extension of an existing one for the development of the field that Pertamina entered in 2014 after acquiring the participating interest of U.S. oil major ConocoPhillips. It includes plans for the drilling of 12 oil wells, the construction of an extraction plant for liquefied petroleum gas and a solar energy project -- for a total estimated cost exceeding $800 million.
The onshore Menzel field has a production capacity of 35,000 barrels of oil per day, and the new investment plan could generate a total of 150 million barrels of oil equivalent in oil and gas output, Pertamina said in a news release.
It is among overseas oil and gas assets that Pertamina has acquired in recent years as the company is tasked with meeting the rising demand for oil in Southeast Asia's largest economy as domestic production has continued to decline.
Indonesia currently produces just over 600,000 barrels of oil per day, less than half of both its output heyday in the 1990s and the nation's consumption needs. That has led to heavy dependence on oil imports and rising concerns for ballooning energy subsidy bills especially when oil and gas prices soared, such as last year.
The contract renewal is part of Pertamina's efforts "to attain national energy resilience," said Pertamina President Nicke Widyawati. "We're looking for not just domestic, but also overseas opportunities."
She added that Pertamina is looking to increase output at the Menzel block and develop nearby fields over the next 25 years, with potential to extend the contract for another 10 years.
