YPF Indonesia joins Kodeco's Madura oil block
JAKARTA (JP): Oil and gas company Kodeco Energy Co. Ltd., a subsidiary of South Korea's Kodeco Group, has sold half of its 50 percent stake in the Western Madura offshore block to YPF Indonesia, a subsidiary of Argentina's YPF S.A.
Kodeco's chief operating officer (CEO), Gye-Wol Choi, and YPF Indonesia's managing director, C.W. Murray, signed the acquisition deal here yesterday.
"Our association with YPF should strengthen our technical expertise and capital to explore and develop the block's potential," Choi said at the signing ceremony.
Both Choi and Murray refused to reveal the value of the acquisition.
Kodeco Energy executive vice president Yun Jae Ryang said the state oil and gas company Pertamina would maintain its 50 percent stake in the block.
He said Kodeco had long planned to expand its operations in the block but the region's economic crisis had made it difficult for the company to raise funds to finance an expansion program.
"There were 12 bidders when we put part of our stake to tender. We then chose YPF in view of its long experience in Indonesia," Ryang said, adding Kodeco would remain the block's operator.
The government awarded Kodeco a production sharing contract over the area in 1981. The block started yielding oil in 1985 and gas in 1993.
The contract area initially covered 6,400 square kilometers but later shrunk to 1,607 sq km when Kodeco relinquished 75 percent of the area to the government after production in line with its contract with Pertamina.
The block reportedly yielded 15,000 barrels per day (bpd) of crude oil at its peak. Currently, its output totals 1,000 bpd due to a depletion in reserves.
The block's gas output was 39 million cubic feet per day (MMSCFD) at its peak, with the state electricity company (PLN) as the lone customer. But output has dropped to 25 MMSCFD since PLN has reduced output at its power plant in Gresik, East Java.
Ryang said the block was believed to still contain large oil and gas reserves and that Kodeco and YPF would allocate US$80 million to further explore and develop the block's potential over the next three years.
He said the expansion program was expected to increase the block's oil output to 30,000 bpd in the next three years.
Kodeco started its Indonesia operation in 1963. It is also active in the agricultural, timber and cement industries.
YPF, Argentina's largest oil and gas company, acquired Maxus of the United States in 1995, resulting in the transfer of all Maxus property in Indonesia to YPF, including interests in the Southeast Sumatra and Northwest Java blocks.
Maxus started its Indonesian operations in 1968 and is currently the country's largest offshore oil producer with an output of 150,000 bpd. (jsk)