Mubadala Petroleum wins Indonesian gasfield contract

Mubadala Petroleum has won a contract to develop a natural gasfield in Indonesia, as the Abu Dhabi investor aims to capitalise on the Asian country's growing energy needs.

Mubadala Petroleum is currently drilling for oil in Indonesia's Kerapu block and Ruby field. Stephen Lock / The National

Mubadala Petroleum has won a contract to develop a natural gas field in Indonesia, as it seeks to capitalise on the Asian country's growing energy needs.

The oil and gas arm of Mubadala, a strategic investment company owned by the Abu Dhabi Government, yesterday signed a production sharing agreement with Indonesia's ministry for energy and natural resources for the offshore West Sebuku block, which lies adjacent to its existing gas operations at the Ruby field in the Sebuku block.

"The award of the West Sebuku is a further extension to Mubadala's Indonesia portfolio," said Steve Peacock, Mubadala Petroleum's chief operating officer.

"It supports our strategy of finding and, if successful, developing gas for Indonesia's growing domestic market and is located in close proximity to the infrastructure we are installing on the Ruby field."

Mubadala Petroleum owns a 75.5 per cent stake in the field, with Japan's Inpex holding the rest. Initial geological surveys have been completed, and the joint venture will now undertake more detailed 3D seismic surveys of Sebuku West.

At the same time, the final details of the deal will be hammered out.

Its location within the world's biggest energy growth market makes Indonesia an attractive investment target.

The country exports about half of its production to its Asian neighbours, where demand for natural gas is steadily increasing.

Indonesia has 106 trillion cubic feet of proven gas reserves, the 14th largest in the world, and the country ranks as the 11th biggest producer, according to the US energy information agency.

In 2009, Indonesia accounted for 9 per cent of global liquefied natural gas (LNG) exports, making it the third largest exporter behind Qatar and Malaysia, according to the research consultancy Wood Mackenzie. Analysts forecast that rising domestic demand will put a strain on supply, further enhancing the appeal of holding production assets in the country.

"Indonesia will increasingly require LNG as we expect domestic demand to outpace domestic supply," said Nicholas Browne, a gas market analyst at Wood Mackenzie.

Mubadala expects production at the Ruby field to begin later this year. The company holds a 70 per cent stake in the field through its Pearloil subsidiary, with Inpex and France's Total sharing the remaining ownership. The consortium planned to invest about US$500 million (Dh1.83 billion) into the development of the field, Mubadala said last year.

A 312-kilometre pipeline that connects the Ruby field with onshore gas processing facilities at Senipah has been completed. The two production platforms in the field are almost finished, and commissioning of the field is expected to begin in the second quarter of this year. The gas from the field will be sold to an Indonesian fertilizer company.

Mubadala Petroleum is also drilling for oil in Indonesia's Kerapu block. The company puts its total production at sites in Oman, Philippines, Thailand, Malaysia and Vietnam at about 400,000 barrels of oil equivalent per day.

Earlier this month, Mubadala Petroleum's deputy chief executive Suhail Al Mazrouei was appointed the UAE's new Minister of Energy.