Energy Persada takes over Kangean gas block

Oil and gas company PT Energi Mega Persada has successfully won the tender to take over the Kangean gas block in East Java from current operator BP Indonesia, a press release from the former company said on Thursday.

The transaction is expected to be finalized next month, it said.

Energi Mega beat other bidders including Medco, Sinox and Elnusa in the tender. The press release did not unveil the value of the acquisition deal, but sources said that Energi Mega had prepared investment funds of between US$160 million and US$170 million to further expand the gas block.

Meanwhile, Investor Daily quoted a company official as saying that the acquisition would be financed from the proceeds of the company?s recent initial public offering (IPO), in addition to bank loans.

He said that the takeover of the Kangean gas block would increase the company?s gas production to 190 million cubic feet of gas per day from about 70 million cubic feet per day at present.

BP?s contract in the Terang Sirasun gas block will actually ends in 2010 but the company has asked for earlier extension of the contract until 2030. But the government has given no response because under the existing regulation, the extension of the contract would be issued only three years before the contract ends.

The Kangean Block production sharing contract covers the Pagerungan fields (already in production) and the Terang Sirasun field. The Pagerungan field currently produces 125 million cubic feet of gas and 1,300 barrels of condensate per day(*)