Kangean gets $300m loan from Japanese lenders

Kangean Finance Company, a wholly-owned subsidiary of Japanese giant Mitsubishi Corporation), the Japan Bank for International Cooperation (JBIC), the international wing of the Japan Finance Corporation and the Bank of Tokyo-Mitsubishi UFJ (BTMU), on Wednesday signed US$300 million syndicated credit facility for the Kangean Oil and Gas development project, offshore East Java.

JBIC provides a credit facility of US$180 million to the project, while BTMU provides a remaining facility of US$120 million. The funds from this facility will be used for several development projects in the Kangean PSC, through the project companies effectively owned by PT Energi Mega Persada Tbk (EMP), a publicly-listed oil and gas company in Indonesia, Japan Petroleum Exploration Co., Ltd (JAPEX) , and Mitsubishi Corporation.

The natural gas from Kangean will be delivered to the Indonesian domestic market via pipelines.

The Kangean PSC is located offshore East Java and comprises an area of about 4,500 square kilometers.

While production is already underway in the Pagerungan gas field and the Sepanjang Island oil field, development work in the Kangean PSC is also ongoing in the TSB gas field and Pagerungan Utara (PUO) oil field. Production in these fields is expected to begin by 2011.

The average oil and gas production rate in 2008 was about 6,300 boed (barrels of oil equivalent per day), but the ongoing development should raise this to 60,000 by 2011, the company said. (denny)