Talisman’s Indonesian assets include interests in production sharing contracts (‘‘PSCs’’) at Corridor, Ogan Komering and Jambi Merang in South Sumatra and in the Tangguh LNG project in West Papua. Talisman also holds exploration acreage, including the Sakakemang and Andaman III PSC in South and North Sumatra, respectively. During the year, Talisman undertook two Joint Study Agreements for areas in South Sumatra which were completed by year-end. Talisman also has an indirect, 6% interest in the Grissik-to-Duri pipeline and the Grissik-to-Singapore pipeline which is used to transport gas from the Corridor PSC.
In 2014, Talisman sold its 7.5% interest in the Southeast Sumatra PSC to PT Pertamina Energi SES. Talisman also relinquished its interest in one of four PSCs in the Makassar Straits and expects to relinquish the remaining three in early 2015. In November 2014, Talisman entered into an agreement to farm-in to the East Jabung PSC for 51% and for operatorship; government approval is expected in 2015.
In the Corridor PSC, Talisman has a 36% non-operated interest in all but two of the producing fields, the exceptions being the Gelam and Suban fields, which are unitized with adjoining blocks where Talisman’s unit interests are 30.96% and 32.4%, respectively.
The majority of Talisman’s natural gas production from the Corridor block is currently sold under long-term sales agreements with PT Chevron Pacific Indonesia (‘‘Chevron’’), Gas Supply Pte. Ltd. (‘‘GSPL’’) and PT Perusahaan Gas Negara (Persero), Tbk. (‘‘PGN’’). Gas sales from Corridor to PGN for their markets in West Java are sold under a long term contract with no associated transportation costs. The volume commitment based on daily contract quantity is approximately 424 bcf (net) over the remaining nine years life of the contract (2015-2023).
In 2014, net production from the Corridor PSC was approximately 59 mboe/d. Corridor production accounted for approximately 46% of Talisman’s Southeast Asia production. In 2014, the Suban-14 well, the first in a minimum three well drilling program, was spud. The Suban-14 well is expected to be completed in early 2015, and Talisman plans to participate in additional Suban development wells throughout the year.
In 2014, production from the Company’s 25% interest in the Jambi Merang PSC averaged 6 mboe/d (net). Talisman plans to sanction the Jambi Merang Phase 2 project in 2016, which will expand the current gas plant capacity and allow the production of additional liquids.
Talisman’s share of production from the Tangguh LNG project contributed 5 mboe/d in 2014. Talisman plans to make a final investment decision on the Tangguh Expansion Project in 2016.
In 2014, Talisman participated in two development wells, one of which was still drilling at year-end, and one appraisal well in Indonesia. Talisman also completed an appraisal well earlier in the year, which had commenced drilling in late 2013.
In 2015, the Company will focus its activity in South Sumatra, which will include development drilling at Corridor and acquiring seismic in Sakakemang.