Star: Exploration above and beyond
The Ring of Fire is hot property for Indonesian and international E&P firms. Star Energy is one of a new breed of energy company, independent and eager

Supramu Santosa understands just how far he has travelled from his hardscrabble life as a skinny 18-year-old roughneck on a Japanese-owned oilrig under the blazing East Java sun. His methodical entrepreneurial drive was fuelled by the need to support his family after his father’s death. At 58, the president and CEO of Star Energy Group, an Indonesian independent oil and gas operator, Mr Santosa is eager to expand the company’s oil and gas portfolio and to identify key exploration potential for geothermal energy.

The company aims at becoming a leader in renewable energy. “We have the largest resource of geothermal energy in the world. Positioned on the Ring of Fire, the world’s most active volcanic zone, our nation has an abundant source of clean, sustainable energy to complement its immense hydrocarbon reserves,” explains Mr Santosa.

Founded in 2003, Star Energy assembled a core team of Indonesian and international professionals, many of whom come from oil multinationals, including the former vice-president for exploration of Gulf Indonesia. Star’s CEO himself spent most of his career in oil multinationals, such as Gulf Western and Gulf Indonesia Resources, where he held various management positions.

SUPRAMU SANTOSA President and CEO, Star Energy

A partnership with Nusantara Capital, a Jakarta securities company, has boosted the group’s ability to purchase energy-targeted tracts. It established itself with an $80-million investment in a producing oil and gas field in the Natuna Sea, securing a 31.25 per cent interest and operational control in the Kakap Production Sharing Contract (PSC), producing oil and exporting gas to Singapore.
“When Conoco Philips decided to divest from the Kakap oil field, the timing and size of the deal was right for an acquisition. It was a big opportunity for us and the steady production of over 8,000 barrels of oil and 58 million cubic feet of gas helped to propel our rapid growth,” relates Mr Santosa. He did not need to consult any astrological charts to realise that the price of oil would rocket from $20 a barrel to nearly $70 during the company’s start-up period.

Poised for new expansion, Star is readying itself for an IPO in 2008. Its recipe for success includes a mixture of low-risk cash flow projects like Kakap, together with higher-risk block explorations like Sebatik and Banyumas. Key to Star’s growth is the identification of small and medium-sized energy assets in proven areas that have access to markets and infrastructure.

The numerous challenges associated with finding new resources mean Star continues to seek out larger multinational drilling partners. The company is confident that a successful IPO will not only strengthen its finances, but may also lead to securing an overseas partner to buttress their exploration costs.

At a time when the world is preoccupied with alternative energy resources, Star firmly believes that geothermal is a viable future source. The operator’s rapidly expanding Wayang Windu power generation project on Java is already the largest in the country and has one of the biggest single geothermal turbines in the world. Its current capacity is to be expandable to 400MW in 2009. “We have five wells producing more than 150MW already, which is almost three times the productivity of the previous operation. The potential for geothermal energy in Indonesia is about 27,000MW and right now the country is only realising 800MW,” adds Mr Santosa. “There’s still a huge amount of potential here.”