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akarta-listed gas distributor PT Perusahaan Gas Negara (PGN) has further strengthened its expansion in gas exploration and production business by acquiring an ownership in one of the country'€™s deepwater projects.

PGN, through its wholly owned subsidiary called PT Saka Energi Indonesia, has acquired an 11.67 percent stake in the Muara Bakau production sharing contract (PSC) from GDF Suez Exploration Indonesia BV, which is a subsidiary of France-based GDF Suez E&P International SA.

'€œThis is a cash transaction,'€ PGN corporate secretary Heri Yusup said, declining to reveal the amount of cash his company disbursed.

Muara Bakau PSC is located in the eastern part of the Kutai Basin in East Kalimantan. It is currently operated by Italian oil and gas firm ENI, which holds a 55 percent stake in the Muara Bakau PSC. GDF Suez, meanwhile, had a 45 percent stake in the block before it sold 11.67 percent to PGN.

The Muara Bakau block is currently under development, with main projects located in its Jangkrik and Jangkrik Northeast fields with more than US$4 billion in investment. It is now the only progressing deepwater project in the country as other projects, particularly the Indonesia Deep Water Development (IDD) project by Chevron and the Masela block by Inpex, remain uncertain.

Jangkrik and Jangkrik Northeast are expected to begin production in the first quarter of 2017, according to ENI. The Jangkrik and Jangkrik Northeast fields are estimated to have significant reserves, with a potential production level of about 450 million standard cubic feet per day (mmscfd).

With the purchase of the Muara Bakau stake, PGN'€™s subsidiary automatically owns a 0.038 percent stake in the IDD project, because part of the Muara Bakau is integrated with the Maha field, one of five fields under the IDD project.

In Indonesia'€™s oil and gas projects, the integration of fields owned by different firms is common practice because many oil and gas fields or working areas are located in the same reservoirs. The integration of the two fields was carried out in 2008.

The Muara Bakau PSC'€™s location is adjacent to Chevron'€™s mega project of the IDD, which involves four PSCs covering five fields, namely Gendalo, Maha, Gandang, Gehem and Bangka.

PGN, through Saka Energi, has increasingly become aggressive recently as the parent company is attempting to secure gas supplies to be delivered to its customers.

Prior to purchasing a stake in Muara Bakau, PGN purchased 25 percent participating interest in the Pangkah block in East Java from Hess in 2013. A year later, the gas distributor increased its ownership to 75 percent. The company'€™s other investment in the upstream gas business involves ownership in the Ketapang block in East Java and Bangkanai block in Central Kalimantan.

The company is also aggressive in its overseas expansion to secure gas supply. Last year, Saka Energi entered a deal to purchase a 36 percent stake in the Eagle Ford block in Texas, the US, from Swift Energy Co. in a deal worth $175 million.

PGN shares, traded under the code PGAS, lost 1.59 percent on Thursday to close at Rp 4,340.