Medco to invest $500 million to develop Blok A in Aceh

Ika Krismantari, The Jakarta Post, Jakarta

The country's largest publicly traded oil company PT Medco Energi Internasional said over the weekend it plans to spend US$500 million to develop Blok A in Aceh.

The company's aim is to start operations and production by 2010.

Medco president director Lukman Mahfoedz said Medco was in the process of submitting for approval its plan of development (POD) to the Upstream Oil and Gas Regulatory Agency (BPMigas), as required under existing regulations.

Lukman said Medco would share costs with its partners Premier Oil Sumatra and Japan Petroleum Exploration.

"We have given the POD to our partners," he said, without elaborating.

Medco and Premier hold the majority stake in Blok A, with 41.67 percent and 41.66 percent respectively.

Japex holds the remaining 16.67 percent.

A Medco-led consortium bought at the end of January a 50 percent stake in Blok A from ConocoPhillips, the third largest U.S. oil company.

In April 2006, Medco and partners purchased the first 50 percent stake in the blok from U.S. energy giant ExxonMobil.

The gas blok was previously owned by Conoco and Exxon, with a participating interest of 50 percent each.

ConocoPhillips and ExxonMobil said they sold their stake because of the high content of carbon dioxide in the block, which makes gas exploration and production more expensive.

The block is reported to have a proven reserve of 0.5 trillion cubic feet.