Pertamina seeks Verenex stake in Libya's Area 47

Indonesia's state-owned PT Pertamina is considering plans to purchase the 50% stake held by Verenex Energy Inc. in Area 47 of Libya's Ghadames basin.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 2 -- Indonesia's state-owned PT Pertamina is considering plans to purchase the 50% stake held by Verenex Energy Inc. in Area 47 of Libya's Ghadames basin.

"Verenex may pull out from the block," said Pertamina upstream director Karen Agustiawan, referring to Area 47, currently owned 50:50 by the Canadian firm and PT Medco Energi Internasional.

Agustiawan said Pertamina is especially interested in Area 47, "as the drilling has been done" and production may begin in 2011 with an initial output estimated at 50,000 b/d.

She added that the block would be Pertamina's third in Libya, if the talks are successful. "We already own two blocks in Libya and are looking forward to see Libya as one of our bases overseas."

Agustiawan said Pertamina has yet to decide the portion of the stakes it would acquire. "We are still in talks with Verenex. We don't know yet whether we will enter the block alone or with partners," she said.

A spokesman for Verenex confirmed that the company has seen "expressions of interest" in its Area 47 stake but declined to indicate whether Pertamina has approached the Calgary-based firm.

"We're not really commenting on individual companies," said Verenex Chief Financial Officer Ken Hillier. "But there have been expressions of interest, there is no question."

Verenex announced in September that it was considering a sale of the company as part of a strategic review to boost its share price, saying it was the "right time" to consider its "strategic options."

The firm said its board had begun "a process to identify, examine, and consider a range of strategic alternatives available to Verenex to maximize shareholder value."

Despite those earlier statements, Hillier said Verenex is "fully prepared to go ahead and develop [Area 47] on our own" and that "It will depend on what the offers are."

Last week, PT Medco Energi Internasional, in a filing to the Indonesia Stock Exchange, said it was seeking investors from the Middle East to take part in the development of Area 47, including combining reserve-based lending and shariah financing.

Earlier, on Nov. 13, Verenex submitted a final appraisal report for A1-47/02 field to the Area 47 management committee, which includes representatives of Verenex, PT Medco Energi Internasional, and the Libyan National Oil Corp.

The report recommended that the field be declared commercial as a first step in advancing a 50,000 b/d (gross) Phase 1 development project in the southern part of Area 47.

In the report, Verenex said it would be feasible to begin oil production in 2011, subject to partner and NOC approvals and negotiation of transportation and marketing arrangements with NOC and pipeline operators in the area.

"Preliminary development costs, including facilities, gathering systems, and sales pipelines, are estimated to be in the range of $800-850 million (gross)," Verenex said, adding that its share of development costs is 25% under terms of the EPSA.

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