In the past few years, the gas supply in Indonesia has shown a decline due to natural decline of gas production from the fields, while gas demand is steadily increasing to support the economic growth and infrastructure development including power generation. To affirm its commitment to continuously develop the Indonesian gas market, PT Medco Energi International Tbk, through its wholly-owned subsidiary PT Medco E&P Indonesia has signed two Gas Sales and Purchase Agreements (GSPA) with PT PLN Persero and PT MEPPOGEN on Friday, 17 October 2014 in Jakarta. The two GSPAs will supply gas for power generation in the North Kalimantan and South Sumatera areas respectively.

MedcoEnergi supplies gas to PT MEPPOGEN’s Gunung Megang Gas-Fired Power Plant in the Muara Enim Regency. Total gas volume of 6,6 Trillion British Thermal Units (TBTU) will be supplied from the South Sumatra PSC block operated by the Company. The supply period will be 21 months or until the said total gas amount is utilized. The agreed gas price is US$ 7.32 per Million Metric British Thermal Unit (MMBTU) for the year 2014, escalating 3% per year. The GSPA is expected to bring revenues, approximately at US$ 43 million to the Government of Indonesia and the PSC Contractor.

The Company, through its Joint Operating Body Pertamina Medco E&P Simenggaris (“JOB-PMEPS), has also signed a GSPA with PT PLN (Persero) to supply 805 BBTU of gas. The contract period is five years with the agreed gas price of US$ 5.52 per MMBTU. The gas will be supplied from South Sembakung gas field in Simenggaris Block to generate electricity in the Tana Tidung Regency, North Kalimantan. The GSPA is expected to bring revenues of US$ 3 million to the Government of Indonesia and PSC Contractors.

Lukman Mahfoedz, President Director & CEO of MedcoEnergi, cited “MedcoEnergi continues to actively explore to discover more oil and gas reserves as well as to supply more gas to the domestic market. In the last two years, the Company has succeeded in finding new gas reserves from its exploration operations, such as Matang (Block A PSC, Aceh), Bajul Besar (Simenggaris PSC, North Kalimantan) and recently Hijau (South Sumatra PSC, South Sumatera).