Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, May 20 -- Indonesia's privately held PT Medco Energi Internasional (Medco), flush with its highest profits ever, plans to acquire BP Indonesia's stake in the Offshore North West Java Sea (ONWJ) block, West Java.
"We were invited by BP and are evaluating the commercial value (of the acquisition)," said Medco operational director Lukman Mahfoedz, who added that his firm is considering the possibility of sharing ownership of the stake with other companies.
BP is the operator of the concession and has a 46% share in the project, while other partners include China's CNOOC 36.72%, Inpex 7.25%, and Itochu Oil Exploration 2.58%.
Medco posted a net profit of $280.2 million in 2008, according to Medco finance director D Cyril Noerhadi. "The net profit in 2008 increased 43 times if compared with that in 2007, which was only $6.6 million," said Cyril, who added that the company's 2008 sales and income were the highest ever in its history.
According to BP Indonesia, "ONWJ is one of Indonesia's largest offshore oil and gas operators" and supplies gas to fertilizer company PT Pupuk Kujang, state-owned electricity company PT PLN, and state-owned gas company PT PGN.
The ONWJ concession, which stretches from Cirebon in the east to the Seribu Islands in the west, includes 670 production wells, 170 platforms, more than 40 processing and service facilities, and 1,600 km of subsea pipelines.
Besides Medco, other Indonesian firms are considering all or part of BP's stake in the concession, which BP Indonesia plans to sell by yearend.
Indonesia's state-owned PT Pertamina has partnered with PT Indika Energy and prepared internal funding for the acquisition, according to a spokesman, while PT Energi Mega Persada also is said to have plans for the purchase of the BP Indonesia stake.
The news coincides with recent reports Medco is seeking $275 million in loans to develop an oil block in Libya.
Mahfoedz said the Area 47 project in Libya would cost $800 million for facility construction and another $300 million for development. Of the total $1.1 billion, Mahfoedz said, "Medco will only contribute 25%."
Medco President Director Darmoyo Doyoatmojo expressed optimism the firm would secure the necessary loans, saying, "Once a reserve has been found, the project's risk will be very small."
He said, "We've submitted our appraisal reports on the project's economic viability to Libya's National Oil Co., and we expect to receive its approval in the third quarter." Darmoyo noted Area 47 is expected to begin production by the end of 2010, with an average output of 50,000 b/d.
Under the production-sharing agreement, Medco and partner Verenex jointly own 13.7% of Area 47, while NOC holds the remaining 86.3%.
Contact Eric Watkins at [email protected].
