Contract extension on Lematang PSC signed

Upstream authority SKK Migas signed on Tuesday a new contract on Lematang PSC in South Sumatra province after the government agreed to extend the contract on the block.

The signing ceremony was witnessed by Minister of Energy and Mineral Resources Sudirman Said and Director General of Oil and Gas IGN Wiratmaja, the directorate general said in a statement.

The existing contract held by PT Medco E&P Lematang (51 percent), Lundin Lematang BV (25 percent) and Lematang E&P Limited expires (23 percent) on April 5, 2017. The new contract is effective as of April 6, 2017 over a period of ten years. The contract covers a working area of 377 sq km.

Medco and its partners agree to pay US$1 million in signature bonus and allocate a total of $2.55 million in firm commitment spending for three years. The firm commitment for three years consists of 2D seismic survey ($1.5 million), G&G study ($50,000) and production facility development ($1 million), Wiratmaja said.

Lematang PSC has 70 bcf of gas reserve and produces 68 mmscfd which is used for power generation in South Sumatra. ?We hope that following the extension of the contract, exploration will be carried out, production will increase and more power will be produced for people in South Sumatra,? Wiratmaja said.

Medco?s CEO Roberto Lorato said: ?MedcoEnergi appreciates the trust given by the Indonesian Government and the opportunity given to operate the block. The signing of 10-year contract extension underlines MedcoEnergi?s commitment to contribute to meeting the national energy needs and the company?s ability to continue adding value as a leading independent energy firm in Indonesia.?

Editing by Johannes Simbolon