Sonoro Denied Indonesia PSC Extension

Canada-based, Indonesia-focused Sonoro Energy said July 9 that the Indonesian energy ministry has declined its second request for an extension of the Budong Budong production sharing contract (PSC) in Sulawesi.

Both requests for an extension had been supported by Indonesia’s energy regulator SKKMigas and a positive indication for granting such extension had been conveyed to Sonoro by the regulator on the requests to the ministry, it said.

In March this year, Sonoro received notice through its subsidiaries that its PSC had not been extended. Since that time, the company said it has been working with SKKMigas to develop a new proposal for submission to the ministry of energy. The second request for an extension was made on the suggestion by the energy ministry to the company after meetings in Jakarta in March, Sonoro said. About a month ago Sonoro - through SKKMigas - submitted the second request for extension to the ministry based on the proposal it developed. This proposal and request for extension has been rejected.

The concession is located onshore West Sulawesi. Sonoro commenced drilling the LG-1 Updip appraisal well in October 2017 with operations continuing for roughly 50 days. In November 2017, the company cased the well without completing a flow test, because of dangerous gas kicks on site and unstable sand formations. The intention was to return to the wellsite in the future to complete the tests. Continuation of the PSC was subject to renewal on January 15, 2018 by the ministry.

Sonoro said it will continue to pursue all avenues to obtain extension of the Budong Budong PSC.