Expanding Energy Territory: POSCO International Develops Oil and Gas Fields with Indonesian Government

POSCO Inter Signs Production Sharing Contract with Indonesian Government
Large Block 14 Times the Size of Seoul... 1.3 Billion Barrels of Natural Gas Reserves
25% of Total Production Obligated for Local Supply
Some Expected to Be Imported to Korea... Contributing to National Energy Security

POSCO International is embarking on resource development in collaboration with the Indonesian government and state-owned enterprises. They will jointly develop a large-scale local block and share the byproducts of crude oil and gas production. Through this, POSCO International aims to contribute to national energy security and expects synergistic effects linked to its own LNG business.

On the 25th, POSCO International announced that it signed a 'production sharing contract' for the Bunga block with Indonesian government agencies and the state-owned oil company Pertamina Hulu Energi (PHE) in Tangerang City, Indonesia. The Bunga block, located offshore in the eastern part of Java Island, Indonesia, is a large block with a total area of 8,500 km². This is equivalent to 14 times the size of Seoul. The industry estimates that the Bunga block contains about 1.3 billion barrels of natural gas reserves.

The production sharing contract signed by POSCO International with the Indonesian government on this day stipulates that the contractor first takes a portion of the produced crude oil and gas to recover investment costs, then shares the remainder with the government at a predetermined ratio. POSCO International is guaranteed a basic exploration period of six years and a development and production period of 30 years, including the operating rights of the Bunga block. The production sharing ratio between the government and the contractor is finalized at 60 to 40 for crude oil and 55 to 45 for gas. Twenty-five percent of the total production must be supplied locally within Indonesia. The participation shares are split evenly, with POSCO International and PHE each holding 50%.

POSCO International plans to commence exploration of the block as soon as possible. It will dispatch experts to a newly established corporation based in Jakarta and evaluate the block’s potential through three-dimensional seismic surveys by 2026. The final decision on exploratory drilling is scheduled for 2027. POSCO International is already producing and selling natural gas through offshore gas fields in Myanmar and onshore gas fields in Australia. Furthermore, if the Bunga block is successfully developed, it is expected to enhance business stability and increase production scale.

POSCO International will contribute to national energy security by importing a portion of the additional production from overseas gas fields into Korea. Synergies are also expected in its own LNG-linked business. The strategy includes actively linking the directly imported LNG fuel to LNG bunkering business and LNG combined power plant operations.

Jung Tak, Vice Chairman of POSCO International, emphasized, "This contract was achieved through years of overseas business know-how, technological capabilities, and the steadfastness of our employees. We will continue to secure new energy sources to advance as an eco-friendly energy specialist company and contribute to national energy security."

This content was produced with the assistance of AI translation services.