Medco, PIM agree on Aceh gas price

JSX-listed energy firm PT.Medco Energi Internasional Tbk and Aceh fertilizer maker PT.Pupuk Iskandar Muda (PIM) has agreed on gas price that would be supplied from the former?s Block A gas fields in Aceh to feed the latter?s plant.

BPMIGAS Chairman Kardaya Warnika told reporters on Tuesday that Meco will sell gas to PIM at US$5 per MMBTU. Should urea price exceed US$360 per tonne, PIM will give 40 percent of the excess price to Medco.

Medco and partners will spend US$600 million to develop the block and would supply 110 MMCFD of gas to PIM for 7 years starting 2010. Another 15 MMCFD of gas from the block would be supplied to state electricity firm PLN.

The gas will be delivered from 3 fields namely Alur Rambong field, Julu Rayeu field and Alur Siwah field, through a 100 km pipeline from Block A.

Sales Purchase Agreement is expected to be signed before the end of the year 2007.

Medco and partners will receive 49 percent production split from the block, higher than the rate of 30 percent normally given to standard PSC contractors.

The block is operated by Medco with a 41.67 percent interest. Other participants are Japex (16.67 percent) and Premier Oil (41.67 percent).(alex)