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apan-based Mitsubishi Corporation has acquired a 100 percent stake in Tomori E&P Limited, a subsidiary of Indonesia’s largest private energy company Medco Energi Internasional, in a transaction worth US$260 million (Rp 2.35 trillion), a Medco top executive said in Jakarta on Monday.

Medco Energi Internasional president director Darmoyo Doyoatmojo said that with the acquisition Mitsubishi would indirectly own a 20 percent interest in the Senoro-Toili oil and gas block in Central Sulawesi.

“Medco Energi believes that the participation of Mitsubishi in the Senoro-Toili block will create a synergy in the development of both upstream and downstream projects at the Senoro gas field,” Darmoyo said, adding that the presence of Mitsubishi would give more certainty to the future of the field.

At present, Tomori E&P holds a 20 percent participation right at the oil and gas block, while PT Medco Tomori E&P Sulawesi, another subsidiary of Medco Energy Internasional, and PT Pertamina Hulu Energi, a subsidiary of state oil and gas firm PT Pertamina, own 30 percent and 50 percent rights, respectively.

The block currently produces around 1,900 barrel oil per day (bpd) and has secured a sales and purchase agreement to provide 250 million metric standard cubic feet per day (mmscfd) to a liquefied natural gas (LNG) plant which will be built by PT Donggi Senoro LNG.

PT Donggi Senoro LNG is jointly owned by Sulawesi LNG Development (a joint venture between Mitsubishi and Korea Gas Corporation), Pertamina Energy Services (Pertamina’s subsidiary) and Medco LNG Indonesia (Medco Energi Internasional’s subsidiary).

The $2.8 billion LNG plant has a total capacity of 2 million tons per year. It has secured LNG sales and purchase agreements with Japan-based Chubu Electric Power and Kyushu Electric Power. Based on the agreements, Chubu and Kyushu will buy 1 million tons and 300,000 tons of LNG per year, respectively.

Kogas has also announced a plan to buy 700,000 tons of LNG from the company, a Bloomberg report said.

The $260 million funds gathered from the acquisition of Tomori E&P would allow Medco to strengthen its capital structure and reduce the ratio of the company’s debt to its equity, Darmoyo explained.

He said he hoped that in the several years ahead, his company’s financial performance would strengthen.

“Divestment had been part of the company’s strategy to reduce debts and improve financial performance,” Darmoyo said.

Mitsubishi said in a press statement on its official website that ownership at the Senoro-Toili oil and gas block would help ensure stable LNG supplies to Donggi Senoro LNG and raise the value of the entire project in Central Sulawesi.

“Together with development of the Kangean oil and gas field [East Java] and operation of Tangguh LNG project [Papua], which Mitsubishi is also participating in, this move will contribute even further to Indonesia’s fast-growing economy,” the company said.

— JP/Rangga D. Fadillah