Pertamina set to acquire Inpex’s share in two blocks

State-owned oil and gas company PT Pertamina is seeking to acquire Inpex Corporation’s participating interests in two oil and gas blocks in Indonesia, upstream regulator BPMigas told reporters Thursday.

The two blocks are the Offshore Northwest Java (ONWJ) block and the Southeast Sumatra block, BPMigas’s spokesman Elan Biantoro said.

“Pertamina wants to acquire Inpex’s assets, but negotiations are still private between [the two companies],” he said. Inpex currently owns a 7.25 percent participating interest in the ONWJ block and 13.07 percent in the Southeast Sumatra block.

Pertamina already has a controlling 46 percent stake in the ONWJ block since securing BP’s share in 2009. Other interest holders of the blocks are: China’s CNOOC ONWJ Ltd. (36.72 percent); Orchad Energy Java BV (5.03 percent); and Talisman Resources Ltd. (5 percent). The block currently produces 26,800 barrels oil per day (bopd) and 205 million standard cubic feet of gas per day (mmscfd).

As for the Southeast Sumatra block, the oil production rate as of Aug. 26 was 41,258 bopd. The block is controlled by China’s National Offshore oil Corp. (CNOOC), which owns 65.54 a percent stake in the block. Other interest holders are: KNOC Sumatera Ltd. (8.91 percent); MC Oil & Gas Sumatera BV (8 percent); Paladin Indonesia (Sunda) Ltd. (3.77 percent); Paladin UK (Southeast Sumatra) Ltd. (2.08 percent); and Paladin Resources (Bahama) Ltd. (1.64 percent)

Pertamina’s president director Karen Agustiawan said the company did acquire upstream assets recently, but she refused to go into detail, saying the partners had not yet agreed to disclose the transaction. Pertamina is confident in acquiring more oil and gas blocks to enable the company to boost its production from its current level of around 432,000 bopd to 700,000 bopd by 2014. The company earlier said it would allocate Rp 10.1 trillion (US$1.1 billion) to oil and gas block acquisition in 2010.

Alfred P. Menayang, Inpex’s external affairs manager for Indonesia operations, also refused to comment on the acquisition. “We are waiting for the official process to be completed,” he said.

Inpex is the operator of the gas-rich Masela block in the Arafura Sea, in which the company holds 90 percent participating interest. Inpex acquired the block in November 1998 through an open bidding process.

The exploration activities resulted in the finding of the Abadi gas-condensate field in the block. Inpex plans to construct a floating LNG plant to process gas from the block. The plant is expected to start the operation in 2016. Currently, the company still conducts front-end engineering and design (FEED) work as well as environmental and social impact assessment for the development of the block.