Medco secures $90m in loan for Lematang PSC development

Indonesia-listed energy firm PT Medco Energi Internasional Tbk. will raise up to US$90 million in loan from a syndication of three local banks including Bank Central Asia, Bank Mandiri and Bank Negara Indonesia (BNI) to finance the development of its Singa gas field in Lematang block, onshore South Sumatra.

Medco's president director Darmoyo Doyoatmodjo said in Jakarta on Friday that under the loan agreement signed in Jakarta on June 17, the three banks would equally provide $30 million to finance the filed development, including building a Co2 removal facility.

The loan agreement reflected the growing confidence from the local banks not only in local oil companies like Medco but also the country?s oil and gas industry in general, he said.

In April this year, Medco and its partner Lundin Petroleum started gas supply from Singa field to West Java via a pipeline owned by IDX-listed state gas distribution firm PT Perusahaan Gas Negara (PGN).

PGN is the gas offtaker of the Singa field for the first three years under the deal in which Medco will supply PGN 48.6 BBTU of gas. State electricity firm PT Perusahaan Listrik Negara (PLN) will be the offtaker from the fourth to ninth year with a 50 mmscfd gas supply to its power plant in West Java.

According to Lundin in August statement, current gross production from the first production well is approximately 15 mmscfd and is restricted by surface facility limitations resulting from higher hydrocarbon liquid production than expected. Additional liquid removal facilities will be installed in 2011 and until such time production will remain constrained.

Production is expected to increase to a gross plateau rate of 50 mmscfd in 2011 following further development drilling, Lundin said in Aug. 4.

Medco is the operator of the block with 74% percent stake and Swedish independent Lundin Petroleum controlling the balance. (godang)