Sept. 1, 2001
Unocal Corp. said subsidiary Unocal Thailand, Ltd. began its first crude oil production in the Gulf of Thailand.

First oil production in Gulf of Thailand

Unocal Corp. said subsidiary Unocal Thail-and, Ltd. began its first crude oil production in the Gulf of Thailand. Early production from the Plamuk field is 2,500-3,000 b/d and is expected to increase to 15,000-18,000 b/d by 1Q 2002. Unocal is drilling additional wells in the Yala and Plamuk fields to increase production by 25%. Yala field will be added when the Thai government approves the production area application.

Floating storage and offloading vessel Sibea has been installed, and plans are in place to add four new production platforms to two existing platforms (one in the Kaphong field and one in the Surat field). Unocal Thailand's partners are Mitsui Oil Exploration Co., Ltd. and PTT Exploration and Production Public Co.

Tokyo Gas developing Australia field

Tokyo Gas Co. and Mitsubishi Corp. announced plans to develop a natural gas field offshore Victoria in which they acquired a 40% stake. The joint venture will sell a maximum of 400 MMcm gas annually in Australia for eight years. This is the first time for Tokyo Gas to develop a gas field. Production is set to start in September 2002.

Japanese find oil in South Rang Dong

Nippon Mitsubishi Oil Corp. announced a second major oil flow in the southern part of Vietnam's Rang Dong oil field. A spokesman for Japan Vietnam Petroleum Co. Ltd. (JVPC) said the company found an oil flow equivalent to about 8,000 b/d from appraisal well RD-10X. JVPC is owned by Nippon Mitsubishi (53%), state-run Japan National Oil Corp. (44%), and Mitsubishi Corp. (3%). The firm said it hopes to start commercial production in the southern part of the field at the end of 2002. JVPC's interest in the Rang Dong Field is (46.5%), with Petrovietnam (17.5%), and Conoco Inc. (36%) holding the balance.

Timor Sea seismic

Indo-Pacific Energy Ltd. and Anadarko Petroleum reached an exploration permitting agreement regarding AC/P26 in the Timor Sea. Anadarko will finance 100% of the costs of acquiring and processing a 120-mile 2D seismic survey over the Rossini Prospect in the eastern portion of the permit area. By doing so, Anadarko has an option to earn interest in AC/P26 by drilling a well on Rossini or the Anson West prospect. Anadarko will have 30 days from the time the seismic data is processed during which to exercise the option to drill an exploration well in the permit. The firm will drill the well and flow-test if needed and will refund a proportion of earlier costs incurred by Indo-Pacific and its partners in the AC/P26 permit. In return, Anadarko will have the right to take up to a 75% equity in the permit for a period of 90 days after completion of the well. By assuming equity, Anadarko would reduce Indo-Pacific's share in the permit to 12.5%. The Rossini seismic program is expected to get underway soon. The subsequent drilling program will most likely take place at the beginning of next year.

Survey will evaluate East Java PSCs

Gulf Indonesia had two more discoveries in the Ketapang production sharing contract (PSC) area, located offshore East Java, in the second quarter. These discoveries came after the Bukit Tua oil and gas discovery in the first quarter. The Jenggolo-1 well flowed at 3,600 b/d. Two more tests of shallower zones in Jenggolo-1 flowed at a combined rate of approximately 9 MMcf/d of natural gas. In order to evaluate the extent of the Ketapang PSC discoveries, a 3D seismic program has been proposed for the greater Bukit Tua/Jenggolo area for later this year to be followed by further appraisal drilling in 2002.

Indonesian gas to Singapore

Conoco Indonesia Inc. began delivering natural gas to Singapore from its South Natuna Sea B Block late in the second quarter. Conoco Indonesia is the last operator of a group of three that will deliver natural gas to Singapore via a 656-km subsea pipeline. The other operators, Premier Oil Natuna Sea Ltd. and Gulf Resources Ltd., began gas delivery in January. In 1999, state-owned Pertamina agreed to sell through contractors 325 MMcf/d of natural gas for 22 years to Singapore's SembCorp Gas Pte. Gas sales are expected to generate around $8 billion in revenue to be split between the Indonesian government and the three production sharing contractors.

New reserves up Indonesia's output

Pertamina announced that development of recently discovered oil reserves is expected to increase Indonesia's crude oil output by 300,000 b/d of oil by 2004. The company believes new discoveries could up the output by 1.7 million b/d in three years. This would reduce the country's reliance on imported crude oil, which is used currently to fuel Indonesian refineries that cannot process local crude oil.

Additional crude oil production will likely come from the development of the Cepu Block in East and Central Java and the Belanak project in West Natuna, which is southeast of the China Sea. Up to 60,000 b/d of oil will come from the development of the West Seno project in the Makassar Straits by Unocal Indonesia Co. It is Indonesia's first deepwater oil project. Production is planned for 2004. Some smaller fields in development could collectively boost crude output as well. Security problems continue to plague oil and gas industry developments in the area, where political instability and internecine fighting among cultural groups has recently escalated. Pertamina is barely maintaining its output quota of 1.26 million b/d as set by OPEC, so a boost in production would be welcome.

CNOOC, Sinopec join forces

China National Offshore Oil Co. (CNOOC) has joined forces with Sinopec to develop the Xihu Depression. CNOOC announced in late June that it had entered into an agreement with Sinopec on co-development of natural gas resources in the Xihu depression in the Donghai Basin 400 km east of Shanghai. The Chinese government transferred 50% of the interest in Xihu (originally belonging to Sinopec) to CNOOC at the beginning of this year.

The two parties have equal interest in the agreement and will jointly seek foreign cooperation. This arrangement should expedite natural gas development in Xihu and will likely further CNOOC's natural gas development strategy. CNOOC is operator for oil and gas exploration and production in the sea area, while both companies will share oil and gas reserves. The agreement will allow the companies to form a joint venture later to explore and produce natural gas reserves in the Xihu Trough, which has about 300 bcm of gas reserves

Sinopec completed an international road show in early July to get shareholder approval for the acquisition of Sinopec Star Petroleum Co. Ltd., which was scheduled to take place in August. The field is producing at 1 MMcm/d of natural gas, a figure that is expected to double in 2003.

Petronas signs new agreement

Petronas, Malaysia's state oil agency, signed a production sharing agreement with two local units of Royal Dutch Shell to draw oil from an offshore area near eastern Sabah state. Block SB 303, 100 km off Kota Kinabalu, the capital of Sabah, was previously operated by other contractors of Petronas. This area, which covers 8,170 sq km with an average depth of 75 meters, contains the Tiga Papan oil field and the Titik Terang gas field.

The contract gives Sabah Shell Petroleum Co. Ltd. a 50% stake in the block, Shell Sabah Selatan Sdn Bhd 10%, and Petronas 40%. According to Petronas, the new contractor will drill two wildcat wells to a minimum depth of 2,600 meters and one optional and development well in the Tiga Papan oil field.