Medco bids $100m for Block A<\/p>\n
Leony Aurora, The Jakarta Post, Jakarta<\/p>\n
PT Medco Energi Internasional, the country's largest locally
\ncontrolled oil and gas firm, is ready to invest US$100 million to
\ndevelop Block A in Aceh should it win the tenders to buy the
\nconcession from ConocoPhillips and ExxonMobil.<\/p>\n
The investment will be used to develop the gas-rich block in
\nLhokseumawe, Nanggroe Aceh Darussalam, over two years, Medco
\npresident director Hilmi Panigoro told The Jakarta Post on
\nTuesday.<\/p>\n
\"It will be easy to find project financing to develop the
\nblock,\" said Hilmi.<\/p>\n
He estimated that the area would be able to produce some 100
\nmillion standard cubic feet per day (mmscfd) at peak production.<\/p>\n
Hilmi further said that the company had submitted candidate
\nblocks to ConocoPhillips, which had invited bids for its
\ninterests in Block A based upon a block-swap mechanism.<\/p>\n
\"They are studying the blocks that we have offered,\" said
\nHilmi.<\/p>\n
He did not name the blocks that had been offered.<\/p>\n
ConocoPhillips owns a 50 percent participating interest in
\nBlock A and acts as the operator. The firm has reportedly stalled
\non the block's development as it holds out for a bigger share of
\nthe gas output than the 48 percent offered by the government.<\/p>\n
If ConocoPhillips does not start construction by next year,
\nthe government will have the right to invite other investors to
\ntake over.<\/p>\n
Hilmi said that the split was already better than the usual
\nscheme, under which the government gets 70 percent of the gas
\nproduced while the contractor is left with the remaining 30
\npercent.<\/p>\n
The Block A split was different as it had relatively small gas
\nreserves and the gas contained a high level of carbon dioxide,
\nwhich therefore made exploitation more expensive.<\/p>\n
Hilmi said that Medco would also participate in the open
\ntender held by Exxon, which has also invited bids in cash for the
\nother 50 percent share of the block.<\/p>\n
Aside from Medco, PT Energi Mega Persada, the country's second
\nlargest local oil company, has also expressed interest in
\ndeveloping Block A.<\/p>\n
The development of the block is critical to ensuring the
\nsurvival of fertilizer firms in Aceh. Output of the province's
\ngiant Arun gas field Arun, operated by Exxon, is on the decline,
\nforcing fertilizer plants there to stop production.<\/p>\n
The government expects to have natural gas flowing from Block
\nA by 2008.<\/p>\n
Several members of the Association of Southeast Asian Nations
\n(ASEAN) decided last Saturday to liquidate the ailing PT ASEAN
\nAceh Fertilizer (AAF) in the province due to uncertainties over
\nits supplies of gas -- a key raw material in fertilizer
\nproduction.<\/p>\n
PT Pupuk Iskandar Muda (PIM), another fertilizer producer, was
\nforced to suspend production two weeks ago as supply from Exxon
\ncame to a halt.<\/p>\n
Exxon stopped supplying gas after the government failed to guarantee
\nthe finding of a replacement cargo of liquefied natural gas
\n(LNG), equivalent to 2.9 trillion British thermal units, to meet
\nits commitments to its Asian buyers.<\/p>\n
State oil and gas firm PT Pertamina, tasked with finding the
\nLNG cargo, found it impossible due to the tight market in the
\nface of the upcoming northern winter.<\/p>\n
LNG shortages in Northeast Asia may worsen as several
\nproducers have said that they will cut production.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/medco-bids-100m-for-block-a-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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