Medco pledges to fulfill LNG commitment to American partner

PT Medco Energy International Tbk has pledged to fulfill its commitment to market its Liquefied Natural Gas (LNG) through the United States-based Marathon Oil Company. For this purpose, Medco will carry out drilling activities at its six natural gas wells in Senoro Toili, Central Sulawesi beginning the second semester of this year, and early next year, Bisnis Indonesia reported on Wednesday.

Medco?s financial director Sugiharto, said in Jakarta on Tuesday that Medco and Pertamina had recently signed a memorandum of understanding on the operation of the gas fields. "Medco and Pertamina will jointly operate the gas fields," he added.

He said that the natural gas to be produced from the Senoro Toili gas block would be developed into liquefied natural gas (LNG) which would later be marketed by Marathon in the western part of the American firm through Mexico.

Marathon will build a LNG receiving plant in Mexico and the plant is expected to be completed in 2005 or 2006. "We, therefore, have to prove that gas reserves are sufficient enough to meet the commitment with Marathon," he added.

Three of the six gas wells have been drilled. The gas reserves found have almost reached the 4 trillion cubic feet required by Marathon. In the second semester of this year and early next year, Medco will drill the other three gas wells.

According to Sugiharto, the company needs between US$2 million and $3 million for the drilling of each gas well. (*)