Medco signs gas contract amendment with Mitra Energy

PT Medco Energi Internasional Tbk, through its subsidiary PT Medco E&P Indonesia (Medco E&P), and PT Mitra Energy Buana have signed an agreement on the amendment of the five-year contract of gas sale and purchase between the two companies.

The signing was conducted by Medco E&P President Director Frila B. Yaman and PT Mitra Energy Buana President Director Muddai Madang in Jakarta last Saturday (December 1st, 2012), Medco announced in a press statement on Monday.

It stated that the gas under the contract will be supplied for consumers in Muara Enim regency of South Sumatera province. The gas will be derived from South & Central Sumatera Block with a delivery point in Rambutan station.

The contract will last for five year since December 1st of 2012, or until the total contract volume reached, depending on which will come first.

The amendment agreed to the contract includes, among others, gas volume and prices. Its daily delivery volume is raised from the initial 2,5 BBTU per day to 3,7 BBTU per day. The total contract volume (TJK) is increased from the previous of only 6,1 TBTU to 12,6 TBTU.

The price has been also increased from US$ 3,41 per mmbtu to US$ 6,04 per mmbtu this year, with an escalation factor of three percent per year. The new gas price is effective since the signing of the amendment.

The increase of gas volume and prices will increase its gross revenue by around US$ US$40 million from US$18 million to US$58 million for the whole of the project. It will also consecutively raise the income of the central government, the local government of Muara Enim, and also Medco E&P as the contractor of South & Central Sumatera PSC.

Besides in South Sumatra, Medco is also currently supplying gas for other domestic needs, such as for fertilizer industry, state utility PT PLN?s power plants in Java island, and East Kalimantan.

Medco said that it is committed to continue increasing gas supply for domestic needs.

Editing by Benget Besalicto Tnb.