Mitsubishi's Subsidiary Inks Finance Contract for Kangean O&G Devt

Kangean Finance Company (a wholly-owned subsidiary of Mitsubishi Corporation), the Japan Bank for International Cooperation (JBIC), the international wing of the Japan Finance Corporation and the Bank of Tokyo-Mitsubishi UFJ (BTMU), today signed US $300 million syndicated credit facility for the Kangean Oil and Gas development project.

JBIC provides a credit facility of US $180 million to the project, while BTMU provides a remaining facility of US $120 million. The funds from this facility will be used for several development projects in the Kangean PSC, through the project companies effectively owned by PT Energi Mega Persada Tbk (EMP), a publicly-listed oil and gas company in Indonesia, Japan Petroleum Exploration Co., Ltd (JAPEX) , and Mitsubishi Corporation. The natural gas from Kangean will be delivered to the Indonesian domestic market via pipelines. By developing these projects, Mitsubishi Corporation will help provide a stable gas supply in Indonesia, and by extension, stable LNG exports to Japan.

Mitsubishi Corporation is also planning the Tangguh LNG Project and Donggi-Senoro LNG Project, which will supply a large amount of LNG to Japan and help expand oil and gas production in Indonesia.

Outline of the Kangean PSC

The Kangean PSC is located offshore East Java and comprises an area of about 4,500 square kilometers. It is jointly owned by EMP (50%), JAPEX (25%), and MC (25% through its investment in Energi Mega Pratama Inc.).

While production is already underway in the Pagerungan gas field and the Sepanjang Island oil field, development work in the Kangean PSC is also ongoing in the TSB gas field and Pagerunagan Utara (PUO) oil field. Production in these fields is expected to begin by 2011.

The average oil and gas production rate in 2008 was about 6,300 boed (barrels of oil equivalent per day), but the ongoing development should raise this to 60,000 by 2011.