Govt to extend Medco's contract in Aceh gas field

Alfian ,  The Jakarta Post ,  Jakarta   |  Fri, 05/22/2009 1:23 PM  |  Business

The government has confirmed it will extend PT Medco E&P Indonesia's contract in the Block A gas field in East Aceh, one of six oil and gas blocks currently waiting for contract extension approval.

"It is impossible *for the government* not to extend the contract. We are now finalizing terms and conditions," upstream oil and gas regulator BPMigas chairman R. Priyono told reporters Wednesday.

Block A contracts will expire in 2011. Energy and Mineral Resources Minister Purnomo Yusgiantoro confirmed this was a priority.

"This is one of our priorities, because the block will supply gas for PT Pupuk Iskandar Muda *a local fertilizer producer*," he said.

Block A contains an estimated 120 million standard cubic feet of gas per day (MMSCFD) with Medco E&P Indonesia holding a 41.67 percent participating interest in the block. Medco partners with Premier Oil Sumatera (North) BV and Japex Block A Ltd which have participating interests of 41.67 percent and 16.67 percent, respectively.

BPMigas says the block will begin production in quarter three of 2010.

Budi Basuki, president director of Medco E&P Indonesia, said "With regard to terms and conditions, we have agreed to a production split of 65 percent *for the government* and 35 percent *for the contractors*. I think now the contract extension only waits for administration procedures," he said.

Budi said that the Block A project extension would need about US$600 million in investment.

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