Medco signs GSPA with Pertamina on Blok A gas
Tuesday, January 27 2015 - 10:13 AM WIB
The GSPA was signed on the sidelines of the Indogas 2015 Exhibition and Conference in Jakarta.
Total volume of gas to be supplied under the GSPA is 200 trillion British thermal unit (tbtu) worth US$2 billion.
The gas from Block A will be channeled by Pertamina to meet the gas needs of Aceh and North Sumatra provinces. The supply will start in 2017 and last 13 years. The total volume is 198 tbtu with daily supply amounting to 78 bbtu. The price is set at $9.45 per mmbtu at tie-in point of the Arun-Belawan gas pipeline. Arun is located in Aceh, while Belawan is the main port in North Sumatra.
Block A is 41.67 percent controlled by Medco (operator), 41.66 percent by KrisEnergy and 16.6 percent by Japex.
?This is a major project for the company. The GSPA will generate a total revenue of $2 billion, of which $492 million will go the government, $209 million to the contractors and $1.3 billion as investment recovery,? the firm said.
During the occasion, Medco also signed an amendment to the GSPA with local government-owned firm Perusda Muara Energi to supply gas for electricity to Musi Rawas regency, South Sumatra. In the amended GSPA, Medco E&P will supply a total volume of 8.750 bbtu 2.5 bbtu per day of gas over a period of 11 years. The firm managed to raise the price of the gas to $6.50 from $3 per mmbtu with an escalation of 2.5 percent per year. The contract will generate $66 million of income for the government and the contractors.
Medco?s President Director and CEO Lukman Mahfoedz said thanks to the GSPA, the impact of the decrease in crude price on the company?s financial condition will be alleviated since the gas price is not pegged to the crude price.
?Once the Senoro and Block A gas projects have been completed in 2015 and 2017 respectively, MedcoEnergi?s income from oil and gas will be fifty-fifty in terms of proportion,? he said.
Editing by Johannes Simbolon