Energi Mega Persada Buys 75% Stake in Mozambique's Buzi Block for $175M

Indonesia-based independent upstream petroleum company PT Energi Mega Persada Tbk. (ENRG) announced Friday that it has acquired oil & gas Exploration and Production Concession Contract (EPCC) for Buzi EPCC Block in Mozambique, Africa. With this purchase, ENRG will own 75 percent participating interest in the block, partnering the Mozambique government who owns 25 percent through Empressa Nacional de Hidrocarbonetos (ENH). The $175 million acquisition is projected to start production in 2017.

ENRG funds the acquisition with a combination of the company's internal cash flow and loan financing.

Buzi EPCC Block has caught the attention of many international oil and gas companies, especially after 283 billion cubic feet (Bcf) of proved & probable gas reserve was discovered, which is expected to commence production by 2017. In addition, the block has 13.4 trillion cubic feet (Tcf) of gas prospective resources.

"Mozambique has emerged as a new giant in natural gas. More than 100 Tcf were recently discovered, and Mozambique is the next emerging region for oil and particularly gas and could become the world's third largest exporter of liquefied natural gas (LNG). A number of large multinational companies are actively exploring, appraising and developing their gas discoveries into LNG projects in Mozambique. We are happy that our entry to Mozambique is in the early stages of gas development and our partner is the government. This shows that Indonesian oil & gas company can already compete internationally by focusing on technological innovation, transparency and fairness," said ENRG President Director Imam Agustino.

As Indonesia's largest listed upstream oil & gas company in terms of production, for the last several years ENRG have been actively acquiring oil & gas blocks in Indonesia and in search of new reserves abroad considering the rising demand for energy in developing countries, especially in Asia and Africa.

Along with the search for new reserves, the company's strategy is to focus on technological innovation to increase asset turnover, improvement of corporate governance and culture, as well as the company's financial performance quality, one of which through accelerated payment of $200 million corporate liabilities to Credit Suisse several months ago.

"We also increase our partnerships with international companies to increase our own capacity and credibility. Those are our main pillars to increase value to our shareholders. Especially since Buzi EPCC Block is a high value asset with measurable risk," according to Imam.

On top of the 283 Bcf of proved & probable gas reserve near-term production from Buzi discovery, the Buzi EPCC Block offers other upsides, which include the following:

  • 13.4 Tcf of gas recoverable prospective resources. The extensive inventory of leads and prospects low risk gas play, are analogous with the existing discoveries
  • Strategic location which is surrounded by such producing gas fields as Pande, Temane, and lnhassoro oil field. Medium term commercial production is expected as early as year 2017
  • Attractive Concession Contract terms
  • Available gas pipeline infrastructure from Mozambique to South Africa
  • High domestic and export gas demand. Particularly for Mozambique's electric generation and petrochemical industry, specifically natural gas as feedstock for fertilizer production

Mozambique is known by the global oil & gas industry as a country with abundant gas reserves & resources. In addition, Mozambique government's structural reform in opening up to international capital has improved their business and investment environment, being one of the best in Africa. Prior to ENRG, several international corporations that have operations in Mozambique include Anadarko (U.S.), ENI (Italy), Total (France), Sasol (South Africa), PTTEP (Thailand), Statoil (Norway), CNPC (China), ONGC (India), Mitsui E&P (Japan), Petronas (Malaysia). Super majors BP and Shell are reported to be among oil giants competing for a slice of the hydrocarbon resources in the country.



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