Tuesday, 9 March 2010

Aussie firm to develop Palawan oilfield

Manila Bulletin

SINGAPORE, March 8 (Reuters) – Kairiki Energy, an Australian firm drilling for oil in Southeast Asia, expects to announce partners for development of the Gindara field in offshore Palawan before end-2010, seeking to expand fledgling production and strengthen its foothold in the Philippines, executives said on Monday.

Kairiki foresees reserves of more than 200 million barrels of oil will be recoverable from Gindara, out of a mean estimate of 634 million barrels of oil in place. That is more than triple the total of 201 million in place for the rest of Kairiki's prospects.

''Gindara is a game changer for us,'' Kairiki managing director Mark Fenton told Reuters.

Kairiki and Gindara majority-owner Nido Petroleum Ltd, also from Australia, plan to woo larger partners by offering them a stake in the oilfield in exchange for financing the first well, Fenton said.

The drilling cost will amount to between $20 million and $30 million, he added.

Oil firms are showing more interest in the Philippines after Galoc, an oilfield partly owned by Nido, in 2008 began production of up to 14,000 bpd of light sour Palawan crude, similar to Abu Dhabi grades.

Galoc was the first major field to come on stream in the archipelago nation since the 1990s.
Crude production in East Asia remains low at around 8 million bpd, versus demand near 25 million bpd.

Kairiki owns 40 percent of Gindara, located north of Palawan island at a water depth of more than 300 metres (984 ft), while Nido owns the rest. Production from the field could take between two and three years to commence after the first well is drilled by mid-2011, executive director Laurie Brown said.

''It is a high-risk, high-impact project where we need the participation of bigger oil companies,'' Brown added in the interview.

This year Kairiki expects to produce oil for the first time, pumping as much as 15,000 barrels per day (bpd) from the shallow-water Tindalo field also in the Philippines, starting from early in the second quarter, or ''within weeks,'' Fenton said.

Nido owns 50 percent and is the operator of Tindalo, while Kairiki holds a 35 percent stake. The remaining 15 percent is held by European oil trader Trafigura, which will market the oil.

Kairiki expects to recover Tindalo investment costs after about six weeks of production, Fenton said.

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