Medco may sell part of stake in C. Sulawesi block to Mitsubishi

JSX-listed oil, gas firm Medco Energi Internasional may agree to sell some of its interest in Senoro-Toili block in Central Kalimantan to Japan’s Mitsubishi Corp. to pave a smooth way for the completion of LNG project negotiation.

“Medco may be willing to sell part of interest in Senoro-Toili if that’s what it takes to make this project running,” Director Rashid Mangunkusumo told Petromindo.Com on Tuesday. He, however, said that thus far, no decision had been made regarding the interest transfer.

Mitsubishi has been asking Pertamina and Medco to be allowed to have interest in the blocks that would supply gas to the LNG project. Pertamina has flatly rejected the request.

Medco and state oil and gas firm Pertamina are in the process of finalizing talks with Mitsubishi Corp. to build 2-2.5MTPA LNG plant in Central Sulawesi with gas supply would be sourced from Pertamina’s 100percent-owned Donggi block and Senoro-Toili block, where Pertamina and Medco have equal interest of 50 percent. Mitsubishi will own majority stake at the LNG plant (51percent) and also act as offtaker, with the rest of the shares would be distributed between Pertamina (29%) and Medco (20%). The plant would be operated under downstream system, where the plant would buy gas from producers on certain pricing formula. HoA on gas supply would be signed this month with final investment decision is expected to be made year-end.

The plant is expected to be completed in 2010.

Lukman Mahfoedz, CEO of Medco EP, a unit of Medco that directly involved with the LNG project, said that the partnership had selected three companies, including Japanese firm as the plant’s EPC contractor candidates. He declined to give names. (alex)