Mubadala Petroleum, the exploration and production company owned by the emirate of Abu Dhabi in the United Arab Emirates, has signed an agreement to sell Premier Oil of the UK a 20 percent stake in an Indonesian block where Mubadala Petroleum is aiming to discover more natural gas.
The accord will farm-out a 20 percent participating interest in each of Mubadala’s Andaman I and South Andaman Gross Split Production Sharing Contracts (PSCs) to the UK company.
Mubadala Petroleum is the operator of both the Andaman I and adjacent South Andaman PSCs.
The value of the transaction was not given and completion was subject to customary conditions, including government approvals.
The Abu Dhabi company explained that the Andaman I and South Andaman PSCs are located in the under-explored but proven North Sumatra basin offshore Aceh in the northwest tip of Sumatra.
Mubadala Petroleum is also a partner with a 30 percent participating interest in the Andaman II PSC, which is operated by Premier with a 40 percent shareholding.
With participating interests in these three adjacent blocks, Mubadala Petroleum is the largest net acreage holder in the area, securing the core of the North Sumatra basin for future exploration growth.
The UAE company said the PSCs have “the potential to unlock a new material gas play for domestic consumption in North Sumatra and potentially long-term export” to regional markets.
“With this farm-out, Mubadala Petroleum will extend its partnership with Premier Oil for the exploration of the Andaman blocks offshore Aceh,” said Bakheet Al Katheeri, Mubadala Petroleum’s Chief Executive.
“Both partners have a strong commitment to this new high-impact growth area which supports Mubadala Petroleum’s growth strategy of finding and, if successful, developing gas for Indonesia’s growing markets,” added Al Katheeri.
Premier for its part has built a dominant position in the Natuna Sea and delivers natural gas by pipeline into Singapore under long-term gas sales agreements.
The UK company is also seeking to backfill these long-term contracts by bringing onstream more discovered but undeveloped resources on the Natuna Sea Block A.
“Demand from Singapore for Premier’s Indonesian gas continues to be robust with Premier’s Natuna Sea Block again capturing an increased market share,” said Premier in a recent operational update.