MEO to relinquish South Madura PSC

By Nellawati

ASX-listed firm MEO Australia Limited said it will relinquish the South Madura PSC, Madura Island, East Java, where it owns a 90 percent interest and serves as operator.

?The PSC will be relinquished upon expiry in October 2013. The 10th and final contract year of the PSC ends on 13 October 2013,? the firm said its newly-released financial report.

Earlier, on Sept. 7, the firm said it was preparing and will submit a Plan of Development (PoD) on the block before the Oct. 13, 2013 expiry date in order to avoid the relinquishment obligation.

MEO explained in the financial report that it closed a transaction in June 2011 to acquire all of the shares in South Madura Exploration Company (SMEC) which holds a 30 percent interest in the South Madura PSC. Following settlement of this transaction, AED Oil (60 percent) applied for and was voted in as operator. Several weeks later, AED Oil went into voluntary administration and its 60 percent interest in the PSC was subsequently sold as part of a suite of assets purchased by Subaru who on sold the South Madura stake to SMEC. Regulatory approval for the transfer of interest and Operatorship to SMEC was granted in June 2012.

Following receipt of regulatory approvals, SMEC submitted an application to be compensated for time lost to these and other events preceding SMEC?s participation in the PSC. A constitutional challenge to the validity of the regulator in late 2012 resulted in the dissolution of the regulator (BPMIGAS) and the appointment of a new regulator (SKK Migas). The disruption to the regulatory regime resulted in no progress in relation to the lost time compensation application, which was subsequently withdrawn.

Editing by Johannes Simbolon