Santos (ASX:STO) has reached a major milestone in its Asian growth strategy after it started gas production from its Wortel project in the Sampang production sharing contract (PSC) offshore East Java, Indonesia.
The Wortel development, which was sanctioned in November 2010, consists of two gas wells, an unmanned wellhead platform and a 10 kilometre pipeline to the existing Santos-operated Oyong facilities.
Gas will then be exported through the existing pipeline to the Grati processing plant where it is sold for domestic power generation.
Gross gas production from both Wortel and Oyong is expected to be about 90 terajoules per day (TJ/d).
Other partners in the Sampang PSC are PetroChina subsidiary SPC with 40% and Cue Energy Resources (ASX:CUE) with 15%.
Wortel is Santos’ third producing asset in Indonesia and the fourth in its base business to start production in the past eight months.
On 6 December 2011, the Reindeer/Devil Creek project – operated by Apache Corporation (NYSE:APA) subsidiary Apache Energy – in the Carnarvon Basin, Western Australia, which Santos holds a 45% stake in, had flowed gas into the Dampier to Bunbury Natural Gas Pipeline.
Initial gas sales are expected to hit 120 TJ/d though the plant has gross capacity of 215 TJ/d.
Prior to this, the Apache-operated Halyard-1 well in the Greater Eastern Spar development had come on stream in June 2011 while the Chim Sao oil field – operated by Premier Oil (LON:PMO) – started production in October 2011.
While much of Santos’ efforts are focused on its LNG projects such as the key Gladstone LNG coal seam gas-to-liquefied natural gas project in Queensland, the PNG LNG project operated by ExxonMobil and the Bonaparte floating LNG project it is developing with GDF Suez, the gas major has also been building up on its Asian portfolio.
Santos’s Asian assets are expected to contribute up to 20% of its production this year with further exploration being carried out in Vietnam, where the company is also targeting additional licences.
Over in Indonesia, Santos is carrying out front-end engineering and design studies on its Peluang asset that will be tied back to the existing Maleo platform and has farmed into two coal seam gas licences in South Sumatra.
Final investment decision on Peluang is expected in the second half of 2012.