New unconventional interest in Indonesia

Posted on 8 July 2014

The right to explore for 'unconventional' oil and gas resources in Central Sumatra, Indonesia, has been awarded to a consortium in which New Zealand Oil & Gas holds an 11.25 per cent interest.

Central Sumatra is one of the major oil producing basins in South East Asia. The MNK Kisaran production sharing contract covers a substantial sub-basin in the same area as the conventional Kisaran production sharing contract where the consortium partners last year successfully drilled for oil and gas. A plan of development for that discovery is currently being prepared, and is expected later this year.

The MNK Kisaran production sharing contract has been formally initialled today. It is one of the first PSCs for unconventional oil and gas resources issued in Indonesia. It is the first time New Zealand Oil & Gas has had exposure to prospective oil and gas resources that qualify for concessional Indonesia government terms. Without those concessions the resources could not be developed commercially.

Unconventional resources are those where substantial volumes of oil and gas are believed to be trapped in rocks, but the rate of production is severely limited by low permeability.

Commercial development of some of these types of rock has been made possible by new extraction technology, particularly in North America.

The consortium will study the effective application of these technologies in onshore Sumatra over the next three years. The first firm, three-year exploration work commitment includes geological and geophysical studies in each year and drilling a vertical exploration well in year three.

The MNK Kisaran partners are:
New Zealand Oil & Gas: 11.25%
Bukit Energy 33.75%
Pacific Oil & Gas 55%

 MNK Kisaran