Medco eyes Aceh?s Block A gas field

Indonesia?s largest publicly traded oil and gas firm Medco Energi Internasional is interested to buy a stake in the Block A gas field in Aceh despite lower production share offered by the government.

Medco?s CEO Hilmi Panigoro said the firm ?is waiting for the (existing) contractors of the block to open their data room.?

He further said the firm was ready to develop the block under the 52:48 production split proposed by the government.

?The (proposed) production split scheme is very interesting,? Hilmi said.

The block is jointly owned by two American energy giants ExxonMobil and ConocoPhilips with the latter as the operator.

Both have delayed the development of the block, citing that the development of the block was not economically feasible given the high CO2 content of its gas, unless the government offered a more generous production split.

The government then proposed to lower its share of the block?s gas output to 52 percent, offering the remaining 48 percent to Conoco and Exxon. But, both firms insisted on a 50-50 percent production split.

The government?s proposal has apparently failed to satisfy Conoco that it has reportedly planned to sell its stake in the block.

Aside from Medco, PT Energi Mega Persada has also voiced interest to buy the Block A shares.

Upstream oil and gas regulatory body BP Migas?s Kardaya Warnika earlier said any companies interested to take over the Block A stake should guarantee that they will be capable of commencing production activities by 2008.

"New operator of the Block A gas field should be able to produce gas by 2008. If not, the government will oppose it," Kardaya said.

The government wants a quick development of the block to solve gas shortage in the province. (Godang)