Talisman’s Indonesian assets include onshore interests at Corridor, Ogan Komering and Jambi Merang as well as offshore interests in Southeast Sumatra, Tangguh and exploration acreage including the Andaman III PSC. Talisman also has an associated 6% interest in the Grissik-to-Duri pipeline and the Grissik-to-Singapore pipeline.
Talisman has a 36% non-operated interest in all but two of the fields in the Corridor PSC and field production facilities. In December 2011, Talisman and its partners in the Corridor PSC executed binding heads of agreement to unitize the Suban field in the Corridor PSC with an adjacent PSC, reducing Talisman’s share of the Suban field from 36% to 32.4%.
In November 2012 Talisman entered into an agreement to dispose of its interest in the Offshore Northwest Java (‘‘ONWJ’’) PSC to PT PERTAMINA Hulu Energi ONWJ.
Talisman is also working towards exiting its exploration blocks in the South Makassar Basin.
There are three major buyers of Corridor gas. Gas sales commenced with first production from Corridor in 1998 pursuant to a gas-to-oil exchange agreement with PT Chevron Pacific Indonesia (‘‘Chevron’’) at the Duri oilfield. These volumes were increased pursuant to another gas-to-oil exchange agreement signed with Chevron in 2000. Gas sales commenced in September 2003 to Gas Supply Pte. Ltd., under the terms of a 20-year gas sales agreement. The sale of gas to PT Perusahaan Gas Negara (Persero), Tbk. (‘‘PGN’’), made pursuant to a 17-year gas sales agreement, began at 51 mmcf/d gross sales gas from Corridor in 2007 and averaged 360 mmcf/d gross sales gas in 2012. In May 2010, the two gas-to-oil exchange agreements with Chevron were converted to agreements whereby the gas is now sold for cash consideration, with approximately 500 bcf gross of gas sales volumes added to all joint venture participants under the 2000 gas sales agreement.
Sales from Corridor to PGN for their markets in West Java are sold under a long-term contract with no associated transportation costs. The minimum volume commitment is approximately 523 bcf net over the remaining 11-year life of the contract. Subsequent to December 31, 2012 an agreement was reached with PGN to increase the contract price for the sale of Corridor gas under the PGN West Java Gas Sales Agreement. Under the new agreement, the gas price will increase in stages effective September 2012.
In 2012, net production from the Corridor PSC was approximately 57.9 mboe/d. Corridor production accounted for approximately 45% of Talisman’s Southeast Asia production. Progress was made on the Letang Tengah Rawa Optimization project, anticipated to deliver 16 mmcf/d net to the premium priced Chevron/Duri gas sales contract in 2013, and the Sumpal expansion project, which includes a well and doubling processing capacity at the Sumpal facility, expected to be completed in 2013. The early compression project at the Dayung field increased net sales gas production to approximately 50 mmcf/d and it is expected that the second phase of the project will increase gross raw facility capacity at the Grissik Central Gas Plant from 310 mmcf/d to 460 mmcf/d by the end of 2013.
In 2010 Talisman acquired a 25% interest in the Jambi Merang PSC. The Jambi Merang project came onstream in April 2011. In 2012, Jambi Merang performance exceeded plan expectations with production averaging 6.5 mboe/d for the year.
Talisman’s share of production from the Tangguh LNG project contributed 27 mmcf/d in 2012.
Talisman participated in 22 development gas and oil wells in 2012.
The Company’s 2013 activities in Indonesia will focus primarily on South Sumatra. Approximately 20 development gas and oil wells are expected to be drilled in Indonesia in 2013.