The start of production was delayed from 2011 due to the sovereign wealth fund’s acquisition of Medco’s previous partner in the block, Canada’s Verenex Energy. Verenex agreed to sell its operations, most based in Libya, to the Libya Investment Authority earlier this month.
“We will start talks with the Libyan government as our new partner,” Hilmi Panigoro, president commissioner of Medco, said on Monday in Jakarta.
“We expect the block’s plan of development to be approved by the government next year, and after the plan is approved, we will need three years to start production.”
He added that production was scheduled to total 50,000 barrels per day.
In 2005, Medco and Verenex won the rights to develop the block for 30 years, with both parties owning equal 50 percent stakes in the block.
Medco and the Libyan sovereign wealth fund will receive 13.7 percent of revenue and the Libyan government 86.3 percent.
Medco, the country’s biggest publicly traded oil company, said in November 2008 that the Area 47 field, located in Libya’s Ghadames Basin, may contain about 2.15 billion barrels of oil equivalent.
Alif Sasetyo, an analyst at PT Mandiri Sekuritas, said the development was positive for Medco because of “so much uncertainty about Medco’s new projects, including the Libya oil block and the Donggi Senoro oil and gas block [in Central Sulawesi].”
Analysts had not expected the Libya project to be on stream until 2014, Alif said.
The development of the Donggi Senoro gas block has been put on hold after two Japanese buyers for the gas pulled out earlier this year, leading to problems with financing. The government has so far been unable to find local buyers for the gas.
Medco shares on Monday closed at Rp 2,725, a decline of 1.8 percent from Friday’s close.
