JAKARTA May 20 Indonesia's government will
extend the natural gas block contract of Block A in Aceh
province operated by Indonesia's energy explorer PT Medco
Energi Internasional Tbk (MEDC.JK), a senior mines and energy
official said on Wednesday.
The block, whose contract will expire in 2011, has an
estimated gas reserve of around 500 billion cubic feet and can
produce about 50 to 100 million cubic feet per day for about 15
Medco is the operator of the block with a 41.67 percent
stake. The other partners are Britain's Premier Oil Plc (PMO.L)
with 41.66 percent and Japan Petroleum Exploration Co. (1662.T)
(JAPEX) with 16.67 percent.
"The block A area is government priority to be extended.
The minister will issue a decision about the extension of the
contract by the end of this month," Evita Legowo, director
general of oil and gas at the ministry, told reporters.
Legowo said the government wanted the operator to develop
the block as quickly as possible as the country needed the gas.
"We have already resolved the terms and conditions for the
block, including the split of production which will be at 65
percent for the the government and 35 percent for the
contractor," she said.
A Medco official, who declined to be identified, said the
development of the block will need around $600 million.
"Medco wants the government to extend the contract of the
block for another 20 years," the official, who declined to be
Indonesia has pushed the contractors to move faster in
developing the area as the country badly needs the gas for
domestic fertiliser factories.
In April last year, Medco signed a natural gas supply
agreement with Indonesian state electricity firm PT Perusahaan
Listrik Negara (PLN).
Medco (MEDC.JK) will supply 85 trillion British Thermal
Units (BTU) of gas from Block A area to PLN for 17 years
Indonesia has far more gas than oil but it faces limited
supplies due to long-term LNG export commitments, which it is
reviewing. The country has about 180 trillion cubic feet of
natural gas reserves.
(Reporting by Muklis Ali; Editing by Ben Tan)