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Oil & Gas

POSCO International, Pertamina seek joint oil, gas development off Indonesia

A successful deal would mark POSCO’s second large-scale E&P project in Asia following Myanmar

By Jul 05, 2021 (Gmt+09:00)

POSCO International's Myanmar gas exploration project
POSCO International's Myanmar gas exploration project

POSCO International Co., the trading unit of South Korean steelmaker POSCO, has agreed with Indonesia’s PT Pertamina Hulu Energi (PHE) to look for joint oil and gas exploration opportunities off Indonesia.

The two companies signed a joint study agreement (JSA) in mid-June to find joint exploration opportunities in an area of 11,515 square kilometers offshore Indonesia, according to industry officials and Indonesian media reports on Monday.

Preliminary studies conducted by the Indonesian state-run company in the 1990s found hydrocarbons that form the basis of crude oil, natural gas and other energy sources over a period of approximately one decade, the reports said.

Pertamina is a Jakarta-based oil and natural gas company that’s wholly owned by the Indonesian government.

The company owns refinery facilities that can process 90% of crude oil in the Southeast Asian nation and monopolizes the country’s sales network.

Created in August 1968 through the merger of Pertamin and Permina, the energy company is the third-largest crude oil producer in Indonesia behind ExxonMobil's Mobil Cepu Ltd. and US-based Chevron Pacific Indonesia.

The Indonesian state-run company is also in partnerships with Korean financial firms, including the export-import bank of Korea, to finance oil and gas exploration projects.

A POSCO International official was quoted as saying in the media reports that the Korean company plans to make the final decision on whether to proceed with the joint exploration project after a joint study into the field for about eight months.

SECOND LARGE-SCALE E&P PROJECT IN ASIA

If POSCO International obtains the final exploration right off Indonesia, it will mark the Korean company’s second large-scale oil and gas development project in Southeast Asia following its ongoing project in Myanmar.

POSCO International CEO Joo Si-bo
POSCO International CEO Joo Si-bo

Daewoo International, the former entity of POSCO International, secured the exploration rights in A-1 and A-3 gas fields off Myanmar in 2000.

In 2008, the Korean company signed a 30-year contract to supply natural gas to a Chinese state-run energy company. The project generates an annual operating profit of between 300 billion won and 400 billion won ($265 million-$354 million).

POSCO International is also diversifying its business portfolio to include a global food business.

Last month, the company said it is joining hands with two local food tech companies to enter the alternative meat market.

POSCO International is expected to post 5.25 trillion won in revenue in the second quarter on a consolidated basis, up 40% from the year-earlier period.

“We aim to grow into a diversified global trading company by swiftly conforming to the paradigm changes across industries,” said POSCO International Chief Executive Joo Si-bo.

Write to Kyung-Min Kang at Kkm1026@hankyung.com

In-Soo Nam edited this article.
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