Medco to spend $23.3m for exploration at Merangin-1 oil block

PT Medco Energi Internasional Tbk has won a tender to operate and manage the oil and gas oil block Merangin-1 PSC, one of oil and gas blocks auctioned off by the government recently, Kompas reported on Tuesday.

Medco's President Director Helmi Panigoro said that the new oil block is located near the Kaji/Semoga oil field, one of oil and gas concession areas currently owned by Medco in South Sumatra.

Helmi said that Medco pledged to spend up to US$23.3 million in six years to carry out exploration activities in the oil block. The work commitment for the new oil block will be begun in 2004.

He said that Medco also agreed to provide an initial payment of US$2.6 million to the government as the compensation payment of the oil block. About US$2 million of the fund will be used as a signature bonus, $0.3 million as contribution for education and training and the other US$0.3 million for procuring exploration equipment. The new oil block will be operated under a production sharing contract. Medco will receive a share of 25 percent from oil production and 40 percent from gas production.

Besides acquiring new oil and blocks from the government, Medco also tries to take over existing oil fields from other companies as part of its expansion programs.(*)