Medco boosts oil output to offset lower oil prices

JAKARTA (JP): Publicly listed oil and gas company Medco Energy Corporation plans to increase its oil, gas and methanol output this year to offset a decrease in prices.

"The depressed prices are really having an impact on us. But we hope to maintain a good, if not better, performance this year by increasing our output," Medco's newly appointed president, John S. Karamoy, told reporters after a company shareholders meeting yesterday.

Karamoy said crude oil prices had decreased to less than US$14 per barrel over the past five months, compared to an average price of $19 per barrel last year.

Methanol prices also plummeted to between $100 and $135 per metric ton over the first half of the year from between $220 and $250 per ton last year.

Karamoy said Medco had increased its oil output to 29,000 barrels per day (bpd) early this year from 20,208 bpd last year. The company's gas production was also increased to 67 million cubic feet per day (MMCFD) from 60 million MMCFD.

Methanol output was raised to 300,000 tons this year, compared to 181,000 tons last year.

Medco, the country's largest Indonesian-owned oil and gas company, has oil and gas fields in East Kalimantan and South Sumatra, and 10 oil rigs for lease.

The company has been operating the methanol plant in Bunyu island, owned by the state oil and gas company Pertamina, since April last year under a 20-year profit-sharing contract.

Medco's gas fields in Tarakan island feed the methanol plant.

The company's gas, oil and methanol and rig leasing are priced in dollars.

Karamoy said Medco enjoyed a 139 percent increase in profits to Rp 96 billion last year from Rp 40.2 billion in 1996, while its sales soared to Rp 661 billion from Rp 360 billion in the same period.

He noted methanol sales since April last year had significantly contributed to the profit increase.

Last year, the company discovered 350 million barrels in oil reserves at its Kaji and Semoga fields in South Sumatra. The discovery was the country's largest oil find in 15 years.

Yesterday's shareholders meeting saw the official acceptance of the retirement of Arifin Panigoro, the company's founder, as its chief commissioner. He was replaced by Hertriono Kartowisastro, who earlier served as company president.

The new president is Karamoy, who earlier served as the president of Medco's oil and gas exploration division, Expan Kalimantan and Sumatra.

The shareholders also decided not to distribute dividends since the company needed funds to continue developing the Kaji and Semoga oil fields.

Karamoy said the monetary and political crisis had discouraged foreign investors from providing loans to local companies, including Medco, to finance development.

"We have thus far invested $17.5 million in the Kaji and Semoga oil fields and need another $30 million for further development through next year," Karamoy said. (jsk)