RECOGNISING that it can be a risky business, exploration and production (E&P) aspirant Ramba Energy is initially setting its sights on securing lower-risk, onshore assets, which are also less costly to explore and develop, said CEO David Soeryadjaya.

Mr Soeryadjaya: We are currently also looking at other E&P properties including another greenfield gas field, as well as other producing assets

This strategy of going for the 'low-hanging fruits' first, is reflected in the mainboard company's first two targets, both onshore - the already-producing Jatirarangon gas field in which it just acquired a 70 per cent stake this month for US$9.72 million, and a 41 per cent stake in the greenfield Lemang Block for US$7 million, with this expected to be completed next month.

'We are currently also looking at other E&P properties including another greenfield gas field, as well as other producing assets, as we want a balanced portfolio,' he said, without identifying the sites.

Mr Soeryadjaya, in an interview with BT, was outlining his strategies when asked how the barely year-old Ramba intends to balance the risks of E&P (which include the highly likely danger of hitting dry wells) against possible rewards.

Going offshore is much, much more expensive, he said, with the cost of drilling one well costing US$10 million-US$20 million at the cheapest (it can run up to US$100 million in ultra-deep waters) versus about US$3 million plus testing for an onshore well. But having said that, if an opportunity for a good offshore asset crops up, Ramba will not ignore it, he stressed.

Expertise-wise, Ramba's key man is its technical director, Bambang Nugroho, a former E&P president at Indonesia's Pertamina. It also intends to outsource the use of top-level E&P specialists ('who command top dollar', he said) at the start, until such time it acquires more assets when 'we can then have a full army' of such specialists, he said.

Its recent acquisition of Ellipse Energy Jatirarangon Wahana, the operator of the Jatirarangon gas field, has also given it a ready-made operational team of 17, said Daniel Jol, its commercial director, who said that Ramba and the current team there are already 'taking stock to see how it can move forward' to further develop the gas field.

Speaking to BT during a site visit this week to the 123 sq km Jatirarangon asset, just an hour's drive from Jakarta, he said that there are several commercial and technical upsides to Ramba's first deal. 'With the field just outside Jakarta, demand for the gas won't go away,' stressed Mr Jol, adding that Indonesia was seeing domestic gas demand exceeding supply.

Ramba has also started negotiations with Pertamina and the Jatirarangon field's gas buyer, state-owned natural gas provider PT Perusahaan Gas Negara or PGN, to secure higher prices for the gas.

It hopes to get about US$5/MBTU (per million British thermal units) - almost double the US$2.55 it is currently paid by PGN under an agreement expiring in 2014 - given that nearby gas fields are getting US$4.24 at the moment, he said. It expects to reach a deal on this around mid-year.

The Jatirarangon field, which began commercial production in October 2004, currently produces four million standard cubic feet per day (mscfd) of gas. (This is of course small compared with the 675-700 mscfd of Indonesian gas which Singapore currently buys from the country.)

To try to ramp up production, Ramba has also dived into discussions with the operating team about further field development, said Mr Jol.

'A low-hanging fruit' will be to 'make over' one of the existing wells there that previously collapsed, with this potentially giving it another 1-1.5 mscfd of gas almost rightaway, he said. But if it contracts a drilling rig to do this, it might as well also drill a new well at the same time, with this potentially giving it another 6-8 mscfd, he added. The total cost of doing both will be around US$6.5 million.

The Lemang Block in South Sumatra is also prospective, said Mr Soeryadjaya, given that the next-door Jabung block, operated by Chinese oil giant PetroChina, is already producing oil. And Ramba hopes to tap on PetroChina's technical expertise to develop Lemang, having signed a technical assistance agreement with PetroChina last October for this.

Potentially, Lemang is expected to have about 190 million barrels of oil and 180 billion standard cubic feet of gas, the company said.

Going forward, to help finance its E&P acquisitions and development programmes, 'Ramba is talking to certain parties, including some companies in oil and gas', including their taking a possible equity stake, disclosed Mr Soeryadjaya.