Exploration and Development of a New Petroleum Province-Java Sea, Indonesia
Authors: Ramsay H.J. , Nedom H.A. 
Published: December 2007

An immense virgin area for exploration and development, a mild climate, shallow water, a capable and plentiful labor force, and a stable and cooperative government as a partner. What more could you want? Good quality crude? There's that, too.

Introduction

Indonesia is surrounded by the world's largest continental shelf, and the petroleum producing potential of this immense area is large. In a potential of this immense area is large. In a portion of the area, the Java Sea, there is active portion of the area, the Java Sea, there is active exploration and development. A favorable geological climate is coupled with equally favorable operating conditions: the physical environment is mild, the water is shallow, and the Indonesian labor force is capable and plentiful. In addition, the government of Indonesia is a stable and cooperative partner. The discoveries to date have provided high-quality oils that are located in a receptive and growing world market. Indonesia is the largest oil producer in Asia. From 885,000 B/D in 1971, output exceeded 1,100,000 B/D in mid-1972 and is expected to reach 2,000,000 B/D by 1975. This growth is a story of government-industry achievement that deserves careful attention.

The Production Sharing Concept

Petroleum exploration of offshore Indonesia began Petroleum exploration of offshore Indonesia began with the first Production Sharing Contract in Aug., 1966. Since then, 49 contracts for exploration and production activity have been negotiated with production activity have been negotiated with Pertamina, the State oil enterprise. Although provisions Pertamina, the State oil enterprise. Although provisions vary, the term is for 30 years with 25 percent of the original area to be relinquished after 3 years and another 25 percent after 6 years. A signature cash bonus is required and minimum expenditures per year are specified. All operating investments are made by the Contractor; and when production is established, these costs are recovered from up to 40 percent of the value of the oil produced, with percent of the value of the oil produced, with unrecovered current expenses being recouped in later years. The remainder of the oil is then shared 65 percent by Pertamina and 35 percent by the Contractor. percent by Pertamina and 35 percent by the Contractor. The Pertamina share may be increased under the contract terms when production reaches a predetermined level, and a production payment to Pertamina may be specified at that time. All payments are based upon the realized price of the oil and are in lieu of other government price of the oil and are in lieu of other government taxes and assessments. The Java Sea area, which is bounded by the islands of Java, Sumatra, Biliton, and Kalimantan, is covered by four contracts with an original area of 179,650 sq miles as shown in Fig. 1. This area is larger than the State of California, Java Sea contractors and their contract areas are, in square miles,

IIAPCO Group 51,000 ARCO Group 21,150 Ashland Group 49,800Cities Service Group 57,700

Oil fields have been discovered and are producing in the first two areas. Although active exploration programs are being conducted in all four, the exploratory programs are being conducted in all four, the exploratory well density to date averages only one well for 2,300 sq miles.

JPT

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