Singapore — Jadestone Energy has restarted crude oil production from Australia's Montara oil field following its maintenance and inspection shutdown, the independent oil and gas production company said in a statement Friday, in a move that could help light sweet crude supply in the Asian spot market rebound.
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Production operations restarted at the Montara facilities on January 11, and production volumes will be ramped up while final checks are concluded, Jadestone Energy said.
The entire facility will be restarted, including both the oil production system and the gas system, which enables gas-lift and gas re-injection so as to optimize production operations as rapidly as possible, the company added.
The Montara oil project consists of three oil producing fields -- Montara, Skua and Swift/Swallow. Crude oil output from the field is around 10,300 b/d.
The project is located in the Timor Sea, about 690 km west of Darwin, Australia. Montara crude has a gravity of around 35 API with a sulfur content of less than 0.05%.
In July 2018, Jadestone Energy acquired a 100% stake in the Montara oil project from Thailand's PTT Exploration and Production.
Montara crude was rarely seen offered in the spot market as output was mainly reserved for Thailand's domestic refineries. PTT had typically shipped an Aframax-sized cargo of Montara crude to Thailand every one to two months.
However, Asian sweet crude traders noted that Jadestone's acquisition from the Thai upstream company could mean that the light sweet Montara crude will be made available in the Asian spot market on a regular basis once it wraps up all the regulatory and financial procedures.
"Catching up on Montara's overdue inspection and maintenance tasks and resolving the regulatory non-compliance notices was a prudent step early in Jadestone's experience with Montara, and serves to enhance the asset's value," Jadestone president and chief executive Paul Blakeley said in the statement.
LIGHT SWEET CRUDE SUPPLY POOL
Asian refinery sources said the restart of Montara crude production could help put the brakes on the rapid decline in light sweet crude supply in the Asian spot market.
"The overall light sweet oil supply pool has become too tight [in the Asian spot market] and [the Montara production restart] is a welcome news," said a trading manager at a Southeast Asian refiner.
Major Southeast Asian crude producers including Indonesia and Vietnam continued to witness their overall production slide in 2018, while growing domestic refining requirements added to the downward pressure on their respective export figures over the past few quarters.
Market watchers noted that Vietnam has been offering less barrels of its flagship grades including Chim Sao, Thang Long, Ruby and Bach Ho over the past several quarters due largely to decreasing production at the aging fields.
Indonesia's crude and condensate exports have been trending sharply lower as Jakarta stepped up efforts to increase dependency on domestic oil in order to slash growing energy import bills.
Indonesia's flagship light-end crude grades including Senipah condensate, Bontang condensate, Handil Mix and Attaka have almost dissipated from the Southeast Asian spot market as most of the output is processed by state-run Pertamina's domestic refineries, industry sources said previously.
"With so many light sweet Southeast Asian grades disappearing from the market, regional buyers would be hoping to see Australian output fill the gap," said a sweet crude and condensate trader at a Japanese integrated trading company.
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