Indonesian firm acquires 20% interest in 2 Oman blocks

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MUSCAT: Indonesian oil and gas company PT Medco Energi Internasional Tbk (MedcoEnergi) has announced that the Omani government has green-lighted its acquisition of 20 per cent interests in two blocks owned and operated by OQ Exploration & Production LLC (OQEP), the upstream arm of OQ Group, the integrated global energy group of the Sultanate of Oman.

It includes Block 60, the flagship upstream asset of OQEP, which is presently the most prolific of the latter’s wholly operated licenses. Located onshore in west central Oman, the block holds two producing fields: Bisat oil field and Abu Butabul gas field. In November 2022, OQ E&P celebrated the commissioning of its third crude processing plant at the Bisat oilfield in Block 60, helping unlock a further 60,000 barrels per day (bpd) of production from the field.

MedcoEnergi also acquired a 20% interest in Block 48, which is a roughly 3,000 sq km exploration license straddling the boundary between Al Dakhiliyah and Al Wusta governorates. Wholly owned and operated by OQ E&P, the Block’s hydrocarbon potential is currently being evaluated via 2D and 3D seismic, with the drilling of an exploration well.

OQ Group had earlier announced that its Board and shareholders had granted approval for the partial divestment of a 40 per cent interest in the two blocks. The transaction stemmed from a sale-purchase agreement signed on August 22, 2023, it noted in a report of its fiscal performance for H1 2023.

“The total sale consideration is RO 548 million, subject to adjustment for the period between the effective date (1 January 2023) and the date of the Royal Decree. Management anticipates executing the transaction before the end of 2023,” it further stated.

For MedcoEnergi, a relatively modest player in Oman’s upstream energy sector, the stake acquisitions will add to its current portfolio of local upstream assets. It has a small stake in Block 56, located in southeast Oman and operated by Tethys Oil of Sweden.

MedcoEnergi is also the operator of the Karim Small Fields project, a cluster of oilfields within the Block 6 concession of Petroleum Development Oman (PDO), but outsourced by the latter to the Indonesian company under a long-term Service Contract.

Commenting on the Omani government’s approval of its stake acquisitions, Hilmi Panigoro, President Director – MedcoEnergi, stated “This acquisition is in line with our strategy of owning and developing high-quality, cash-generative assets with great growth potential. Once completed, the acquisition will increase MedcoEnergi's daily production by ~13 MBOEPD (13K barrels of oil equivalent per day) and contribute significantly to future gas and liquids reserves.”

The transaction is expected to be completed before the end of this year, the energy firm added.