POSCO International, Pertamina win gas exploration rights off Indonesia

POSCO International Corp., the general trading and energy exploration unit of South Korea’s steel giant POSCO Holdings Inc., said on Thursday it has won the rights to explore gas fields off Indonesia in a consortium with Indonesia’s PT Pertamina Hulu Energi (PHE).

Through international bidding, the 50-50 joint venture obtained from the Indonesian government the rights for exploration, development and production (E&P) of natural gas at the Bunga gas block off the eastern island of Java.

Under a deal with its partner, POSCO International will operate the gas development project.

POSCO International and PHE began feasibility studies on the Bunga block in 2021.

PHE is the overseas oil and gas development subsidiary of PT Pertamina, which is wholly owned by the Indonesian government.

Pertamina runs 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.

GAS E&P VALUE CHAIN

POSCO International said it will discuss with the Indonesian government how to share gas produced from the Bunga project if exploration and development prove successful.

The Bunga block will mark the Korean company’s second large-scale gas development project in Southeast Asia following its ongoing project in Myanmar.

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

Since 2013, POSCO International has taken part in natural gas exploration and production projects across Asia, including the Senex gas project in Australia.

Earlier this year, the company absorbed its unlisted affiliate POSCO Energy Co. to reinforce its energy exploration and production value chain.

While POSCO International imports liquefied natural gas, POSCO Energy operates an LNG terminal, a facility for regasifying the liquefied fuel, in Gwangyang, 300 km south of Seoul.

Through the merger, POSCO International hopes to expand its LNG supply chain from imports, liquefaction and storage to gas supply for consumers.

The company also plans to strengthen its LNG bunkering business, which supplies natural gas to vessels from the terminal.

POSCO International said in January it will spend 1 trillion won ($810 million) to build a second LNG terminal to expand LNG storage capacity.

Write to Jae-Fu Kim at hu@hankyung.com

In-Soo Nam edited this article.