Engie may sell Indonesian, Malaysian assets

18 May 2016, Week 19 Issue 525

Engie is reportedly lining up the sale of its upstream assets in Indonesia and Malaysia as a single package for up to US$500 million.

The package, which is being marketed by Bank of America Merrill Lynch, includes a 33.3% working interest at the Eni-operated Muara Bakau production-sharing contract (PSC) offshore Indonesia.

Buyers will also be offered 20% stakes in offshore Malaysia exploration Blocks 2F and 3F, as well as 12.5% and 20% stakes in Indonesia’s North Ganal and Arguni exploration licences.

Engie is separately offering its 60% stake in the Australian Bonaparte gas project, according to Reuters. An unnamed banking source told Reuters that the first bidding round would be completed by mid-June.

Opting for a single-package sale allows Engie to capitalise on the near-term value of Muara Bakau, potentially driving interest in riskier exploration licences.

Muara Bakau’s production is expected to reach 450 million cubic feet (12.74 million cubic metres) per day after it launches in the first quarter of 2017.

Eni signed a purchase and sale agreement with Pertamina subsidiary PERSERO in June 2015. The agreement enables Pertamina to purchase 1.4 million tonnes per year of LNG from the fields, via Bontang LNG plant, from 2017.

Asian companies such as PTT, Inpex, Mitsui, Petronas and Pertamina are all thought to be mulling Engie’s Southeast Asian assets.

Muara Bakau may be of particular interest to Pertamina, given the firm’s pursuit of additional gas reserves as Indonesia heads towards net importer status in 2019. Perusahaan Gas Negara (PGN) subsidiary Saka Energi currently owns an 11.6% stake at Muara Bakau.

Rumours of Engie’s upstream sell-off have swirled since February, when sources cited by Reuters suggested the French firm would offload 2.5-3 billion euros (US$2.82-3.4 billion) worth of assets globally. Comparatively, selling the Southeast Asian assets was said to be a straightforward proposition, enabling potential deals with local bidders.

Other international majors are advertising assets in the region as they adjust to global market conditions.

Chevron is reportedly looking for US$1.3 billion to take its assets in Myanmar, in a deal that has interested Australia-based Woodside Petroleum, PTT, Chinese investors and Japanese trading houses.

Both Chevron and ConocoPhillips have asked Jakarta for permission to offload their 25% and 40% stakes at the South Natuna Sea Block B offshore Indonesia.

Edited by

Andrew Kemp

Editor

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