Kangean Block, how worthy, how risky?
Bakrie acquired Kangean Block from BP Plc at only USD160 million in 2004. BP tried hard to extend the working contract for Kangean Block which matured 2010, but failed. Shortly after Bakrie acquired the block, President Susilo Bambang Yudhoyono's administration awarded 20-year extension in late 2004 when Aburizal Bakrie was still the coordinating minister for the economy. So far, no allegation of corruption, collusion, or nepotism (KKN) behind the contract extension, but we never know what will happen if Indonesia has new administration in 2009?
Last night I asked a former Caltex (Chevron) geologist on his views about stories that Marubeni and Middle East investors are competing to buy Kangean Block from Energi Mega Persada (controlled by Bakrie family).
"Once an investor asked me to review the block. The gas reserves were far below the claims. I don't know if there are new discoveries in the last two years. But without new discovery, the block's valutation is around USD400 million only," the senior geologist said.
But some say it worth USD700 million?
"Looks like USD700 million, but when you dig out the data more carefully, you'll end up with at least 40% discount," he argued.
Part of the claims is Kangean Block's reserves at 2.3 TCF of which 1.3 TCF is certified (proven). With simple math, Kangean gas worth USD2 billion minimum. So, what is the rationale behind your number (USD400 million) or other's (USD700 million)?
"Let me ask you, why BP only got USD160 million if you have USD2 billion asset?"
"Because BP failed to get the contract extension?"
"Exactly. But that's not necessarily translated to USD2 billion once you secured the contract extension. Let me ask you, how come that ConocoPhilips secured a contract to sell gas to 2.3 TCF to Perusahaan Gas Negara (PGN) in August 2004 at USD4.3 billion while similar gas amount in Kangean now only worth USD700 million the most as they said?"
"I don't know. I need to ask someone else."
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Last night I asked a former Caltex (Chevron) geologist on his views about stories that Marubeni and Middle East investors are competing to buy Kangean Block from Energi Mega Persada (controlled by Bakrie family).
"Once an investor asked me to review the block. The gas reserves were far below the claims. I don't know if there are new discoveries in the last two years. But without new discovery, the block's valutation is around USD400 million only," the senior geologist said.
But some say it worth USD700 million?
"Looks like USD700 million, but when you dig out the data more carefully, you'll end up with at least 40% discount," he argued.
Part of the claims is Kangean Block's reserves at 2.3 TCF of which 1.3 TCF is certified (proven). With simple math, Kangean gas worth USD2 billion minimum. So, what is the rationale behind your number (USD400 million) or other's (USD700 million)?
"Let me ask you, why BP only got USD160 million if you have USD2 billion asset?"
"Because BP failed to get the contract extension?"
"Exactly. But that's not necessarily translated to USD2 billion once you secured the contract extension. Let me ask you, how come that ConocoPhilips secured a contract to sell gas to 2.3 TCF to Perusahaan Gas Negara (PGN) in August 2004 at USD4.3 billion while similar gas amount in Kangean now only worth USD700 million the most as they said?"
"I don't know. I need to ask someone else."
Labels: Kangean
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posted by yosef at 10:48 AM
2 Comments:
a friend of mine told me that, since SBY become our president and Abdurizal Bakrie as one of the minister, the Bakrie bro have receive Rp9 trillion worth of project maybe more?
What EMP claim on their gas reserves is consider gross proved (P1) reserves of about 1.3 TCF. But we don't know wheter this gas from sinlge field or accumulated from various fiels. Assumed from single field, therefore under PSC contract, EMP only entitle 30% gas profit after GOI reimbursed cost recovery. Having simple mathematic and applied gas price of USD 2.5/mscf and NPV 15%, so this P1 reserves worth only less than USD 850 million. This number does not take into account an associated investment and domestic gas market obligation that might be applied. Geologist appraisal probably refer that gas spreads over some field and technically within depletion production phase, and therefore worth less than USD 500 million. Economic scenario will be vary, depend on technical aspect, risk, monetary value, etc, etc.
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