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Medco to spend $40 million on oil field exploration in Libya

Indonesia’s publicly listed oil and gas company PT Medco Energi Internasional plans to spend  US$40 million on exploration activities on an oil block in Libya this year, a director of the company said recently

Alfian (The Jakarta Post)
Jakarta
Thu, April 8, 2010

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Medco to spend $40 million on oil field exploration in Libya

I

ndonesia’s publicly listed oil and gas company PT Medco Energi Internasional plans to spend  US$40 million on exploration activities on an oil block in Libya this year, a director of the company said recently.

Medco’s operational director Lukman Mahfoedz said that the block, called Area 47, would require as much as US$80 million for exploration activities this year. “Medco will cover half of the required funds and we will finance this from our internal sources,” Lukman said in a text message.

He added that the money would be used to fund a feasibility study and exploration. “We will focus on appraisal and exploration activities, including drilling three more exploration wells in addition to the 21 wells we have drilled already ” Lukman added.

In an earlier press statement, Medco said that the drilling program for this year will also include the completion and testing of three previously drilled wells, which were suspended.

Area 47 is estimated to have contingent reserves of 307 million barrels of oil. Earlier, Medco teamed up with Canada-based Verenex Energy Inc to develop the block with Verenex appointed as the operator. But, since December last year, the Libyan Investment Authority (LIA) has acquired Verenex’s participating interest in the block.

LIA is a wealth fund management company established by the Libyan Government in 2006 to help manage the country’s surplus oil revenues.

Following the acquisition of Verenex’s interest in the block, Medco was appointed as the block operator for exploration activity starting in April 1, 2010.

Medco said that the company and LIA were now in the final stages of seeking a declaration of commerciality from Libya’s National Oil Corporation for the discoveries made in the area. “The schedule for FID [Final Investment Decisions] is set to be made by 2011 and, afterward, we will carry on with the full development of the block,” Lukman said.

Lukman said that the block’s full production facilities would require investment of about US$800 million.

The Libyan government will cover half of the required investment and the contractors, Medco and LIA, will cover the other half of the required figure, he added.

“Of the contractor’s portion, Medco must contribute 50 percent of that,” Lukman said.

In a press conference last year, Medco president director Darmoyo Doyoatmojo said that the company had been in talks with several banks in a bid to finance the project. He was optimistic that the project would easily attract loans. “Once a reserve of oil has been found, the project’s risk will be very small,” Darmoyo said.

Medco’s oil production in Indonesia dropped to 35,000 barrels per day (bpd) in 2009 from 45,000 bpd in 2008.  

The company’s gas production also dropped from 108.1 billion British thermal units per day (BBTUD) in 2008 to 104.3 BBTUD in 2009.

 

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