Medco Gets Green Light For $80m Paus Biru Gas Project, Reports Q1 Loss

Medco gets green light for $80m Paus Biru gas project, reports Q1 loss.  Oil and gas producer PT Medco Energi Internasional has secured government approval for the development of the gassy Paus Biru Field in the Madura Strait off the coast of East Java as it reports a loss in the first quarter. 

Medco’s $80 million development plan for the field, located within the Sampang Block, was approved by the Upstream Oil and Gas Special Regulatory Taskforce (SKK Migas) on July 30. 

Paus Biru Gas Project

The plan includes drilling a new gas well, erecting a new drilling rig and installing underwater pipes to channel 31 million standard cubic feet per day (mmscfd) of gas, which is slated for the Grati gas-fired power plant (PLTGU) of state-owned company PT Indonesia Power. 

“We have negotiated with the potential gas buyer, and we expect first gas in 2023,” said Medco chief operating officer Ronald Gunawan at a press conference on Tuesday. 

SKK Migas noted in a statement that Medco’s contract for the block would expire in 2027. The publicly-listed company took over the block from Ophir Energy after acquiring the latter in 2019. 

The operation of Paus Biru–meaning “blue whale” in Indonesian–will raise Indonesia’s gas output, which stood at 6,830 mmscfd in June, as the country aims to become a major gas producer in the Asia Pacific region by 2030. 

On Thursday, the publicly listed company reported that it had booked $20 million in losses in the first quarter, a reversal from $28.05 million of net profit recorded in the same period last year. The loss occurred as profits from the oil and gas and power segments were offset by losses at mining firm PT Amman Mineral Nusa Tenggara (AMNT) as development on phase 7 progresses, the company wrote in a statement. 

Its capital expenditure (capex) stood at $67 million in this year’s first three months, down from $130 million spent in the last quarter of 2019 following the early completion of the development phase 4B of Bualuang in Thailand in December and deferrals and reductions in the 2020 capital program. Of the first quarter’s capex, $51 million was for the oil and gas segment, while $16 million was for the power segment. 

“While commodity prices and capital markets have begun to recover, Medco has responded quickly with protocols to ensure the well-being of our staff and over $200 million of expenditure deferrals and reductions to preserve cash and support our balance sheet,” Medco CEO Robert Lorato said in the statement. 

“Despite reducing our capital program, I am pleased to see successful exploration discoveries in both Natuna and Ijen.” Medco reported a successful exploration drilling program in South Natuna Sea Block B PSC following commercial discoveries in both the Bronang-2 and Kaci-2 wells. 

The wells tested with high-quality dry gas and have opened up a new play with several future opportunities, it said, while two further exploration wells will be drilled in Block B this year. 

The recent geothermal exploration in Blawan Ijen, East Java, also led to the discovery of a steam reservoir at the Ijen 6-1 well. 

Medco reported oil and gas production of 101 million barrels of oil equivalent per day (mboepd) in the first quarter, up 10 percent from the corresponding period last year, but down 5 percent from the fourth quarter of 2019 due to the extended shutdown at Block A Aceh in the first three months of 2020. 

It expects to produce 100-105 mboepd oil and gas throughout this year and book power sales of 2,600 GWh with total capex of $240 million. 

“The world and our industry continue to adapt to these extraordinarily challenging times caused by the coronavirus pandemic and low oil price environment,” said president director Hilmi Panigoro. 

“Medco will continue to focus on safeguarding the well-being of our people and minimizing the impact on our business as we continue to deliver on our commitment to stakeholders.”Stocks of Medco, traded at Indonesia Stock Exchange (IDX) with the code MEDC, rose 1.79 percent on Thursday morning trading as the main gauge, the Jakarta Composite Index (JCI), slipped 0.1 percent. Medco gets green light for $80m Paus Biru gas project, reports Q1 loss (Norman Harsono The Jakarta Post)