PGN acquires 8.91% stake in South East Sumatra block

IDX-listed gas distribution company PGN through subsidiary PT Saka Energi Indonesia officially acquired on Thursday 8.91 percent shares in the South East Sumatra block from Korean National Oil Corp (KNOC) for US$46 million, Kontan daily reported on Friday.

Operational Director of Saka Energi Tumbur Parlindungan was quoted as saying that the company was interested in acquiring the block because it still has huge production rate, which currently stands at 48,400 boepd.

PGN Corporate Secretary Ridha Ababil said that the latest aggressive move by PGN in acquiring minority stakes in oil and gas blocks forms part of its strategy to obtain experience in the upstream business.

Located in the Java Sea, the South East Sumatra block, which began production in 1971, is 65.5 percent owned by China National Oil Company (CNOOC), PT Pertamina Hulu Energi 13 percent, and the remainder now held by Saka Energi.

The current contract over the block is set to expire in 2018. The block has 34 fields and 360 wells. Production comes from the Cinta field in the southern part and Widuri field in northern part, connected with a 513-km undersea pipeline.

A source told Kontan that the move by KNOC forms part of the company?s strategy to leave the Indonesian oil and gas sector following recent unsuccessful drilling programs.

Saka Energi completed on Tuesday the acquisition of Hess Corporation?s remaining 75 percent stake in the Ujung Pangkah block for $650 million. In October 2013, the company acquired 100 percent stake in South Sesulu block in East Kalimantan, also from Hess Corp. (*)