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Medco Group.

Backgrounds

Group Medco started business as an onshore oil and gas drilling contractor. Meta Epsi Pribumi Drilling Co. (Medco) was established by Arifin Panigoro in 1980. Currently Medco has 14 oil and gas blocks and 16 offshore rigs in Sumatra, Kalimantan, Sulawesi, Java and Papua. Medco also has oil fields abroad such as in America, Australia, the Netherlands and Middle East.

The surge in the oil prices boosted Medco and became more aggressive in expanding business in the oil sector. Late January, 2007, Medco found new oil field in Oman with a production capacity of 18,000 barrels a day. Medco plans to expand its production capacity from oil field in Libya to start producing by the end of 2007.

By the end of 2006, Medco acquired Novus, an oil company in the United States having a production capacity of 20 million cubic feet of gas and 500 barrels of oil a day.The Medco Group's total production capacity now is 60,000 barrels of crude oil and 150 million cubic feet of gas a day in the country.

Recently the Medco Group through PT. Medco Power agreed to team up with PLN to build a 100 megawatt gas fired power plant (PLTG) 100 in Nanggroe Aceh Darussalam (NAD) with an investment of US$ 100 million or around Rp 900 billion. The PLTG will have gas supply from the A Block to be developed by PT Medco E&P, another subsidiary, at an estimated cost of US$ 600 million. The A Block in Lhokseumawe, construction of which to start next year is expected to produce gas only in 2010.

The Medco Group also plans to build an ethanol factory to produce cassava based biofuel. The company will grow cassava over hundreds of hectares of land in Kota Bumi, North Lampung with an investment of US$ 34.13 million. The factory will produce 180 kiloliters of ethanol a day. Medco will cooperate with local farmers to guarantee supply of basic material. The factory to start operation by the end of 2007.

Demand for biofuel is growing and the prospect is encouraging for business in biofuel. In the United States, transport oil fuel is required to have a 5% content of biofuel. In Brazil the required content is 20%.

Recently Medco offered to sell its 51.3% stake in oil drilling subsidiary PT Apexindo Pratama Duta Tbk Medco has named Credit Suisse as its financial advisor in the planned divestment. It said it wants to use the fund from the share sale to finance business expansion in the upstream sector of oil and gas sector.

Currently the Medco Group has grown to become widely diversified corporation with stakes not only in the oil and gas sector but also in various other sectors such as banking, agribusiness, food processing and manufacturing sector.

Energy the core business

PT. Meta Epsi Engineering was founded in 1975 by Arifin Panigoro and a number of fellow alumnus from the Bandung Institute of Technology to operate in oil and gas service.

PT. Medco Energi Corp. operated in oil and gas exploration and production with a daily production capacity of 60,900 barrels of crude oil. It signed a Rp 1 trillion contract to supply 15,000 barrels of oil to Mitsui Corp. of in 2000. Medco has met its domestic market obligation (DMO) under which it is required to set aside 25% of its total production for Pertamina to be processed into domestic fuels.

PT. Medco Antareja and PT. Apexindo Pratama Duta operate in drilling service. PT. Medco Antareja operates 12 units of onshore rigs with capacity ranging from 600 HP to 2,000 HP. PT. Apexindo Pratama Duta has three offshore rigs. Apexindo cooperates with a number of large oil companies such as Total Indonesie in East Kalimantan, Total Sirri in Dubai, Middle East and ELF in Brunei Darussalam.

PT. Exspan Kalimantan and PT. Exspan Tarakan, which was established in 1990 took over a oil and gas field from Tesoro Company of USA in Sanga-Sanga, Samboja and Tarakan oilfield in East Kalimantan Timur. PT. Exspan Kalimantan has oil reserve of 11.15 MMBO and gas reserve of 87.68 BCF with oil output of 5,800 BOPD.

PT. Exspan Sumatra has taken over an oil field from Stanvac of USA in South Sumatra at a price of US$ 88 million. The oil field has a reserve of 170.03 MMBO and gas reserve of 82.13 BCF with production of 35,500 BOPD. The company found a new oil field in Kaji and Semoga, South Sumatra, which has an oil reserve of 350 million barrels. The company has five subsidiaries operating in oil explorations including Exspan Pasemah Inc, Exspan Airsenda Inc., Exspan Airlimau Inc, Exspan Eploration & Production Inc,.Exspan Myanmar Inc., Exspan Cumi-Cumi Inc.

PT. Exspan Pasemah in 2000 teamed u with Petronas Carigali Overseas Sdn, Bhd, of Malaysia to drill three oil wells in Pasemah, South Sumatra over 8,560 km2 with an investment of US$ 6 million for a long term contract to end in 2023. The Pasemah block was acquired at a price of US$ 11.4 million from a joint venture of Esso and Mobil Oil of the United States.

PT. Medco Methanol Bunyu signed in 1997 a 20-year contract to operate methanol factory of Pertamina on the island of Bunyu, East Kalimantan, with a capacity of 285,383 metric tons a year.

The Medco Group went international for the first time through Expans Myamnar Inc which held two PSC (Production Sharing Contrator) licenses for onshore operation in Myanmar with a concession of 2,517 sq.m. and with an estimated oil reserve of 13 MMBO and gas reserve of 315 BCF.

PT Medco International Petroleum Ltd. has established cooperation with Kuwait Energy Company KSCC (KEC) and HL Petroleum Ltd (JHL) to operate in oil and gas explorations in Cambodia. In 2007 Medco, which was the operator under the cooperation sold a 21.25% stake in the Cambodia block to Lundin Cambodia BV.

PT Medco Energi Internasional Tbk through PT Medco E&P Indonesia will pay US$ 248 million or around Rp 4.32 trillion for the development of the A Block in he regency of East Aceh, Nanggroe Aceh Darussalam (NAD).

The cost of developing the A Block has increased from an earlier estimate of US$ 450 million to around US$ 600 million as a result of an increase in the prices of production equipment. Medco has a production split of 49% and the government 51% from the A Block, which is expected to start producing gas in 2010.

In 2010, the A Block is expected to have a capacity to turn out 125 million cubic feet of gas a day (mile-mile standard cubic feet per day/mmscfd) and 10 mmscfd of which will be supplied to the state-owned fertilizer factory PT Pupuk Iskandar Muda (PIM) and 15 mmscfd to state-owned electricity company PT. PLN.

Medco Energi Internasional Tbk is tightly competing against Kuwait Energy Company (KEC) for a 49% stake in Somalia Petroleum Corporation (SPG). Somalia Petroleum is an oil and gas comoany in Somalia, eastern Africa. Medco already spent US$ 1 million for law consulting service in Somalia. Somalia is a new target in Medco's expansion abroad after acquiring oil and gas stakes in the United States, Libya, Oman and Cambodia.

Pipe industry

Medco has a number of subsidiaries in the manufacturing sector to support its oil and gas ventures. The subsidiaries include PT. Kujang Europipe Indonesia operating in steel pipe industry and PT Multi Fibrindo Gemilang.

PT. Multi Fabrindo Gemilang produces 200,000 tons of spheric tanks, 1,000 tons of mooring buoys, 500 tons of process piping, 360 units of pressure vessels, 30,000 tons of bridges and 16,000 tons of tower a year.

Hotel & property

It also has subsidiaries operating in the hotel and property sector. The Medco Group has a number of hotel chains including Imperial Hotel, in Bali under PT. Satria Balitama; Novotel Hotel in Bukit Tinggi, West Sumatra Barat under PT. Grahamas Citrawisata; Grand Preanger Hotel, Bandung under PT. Bina Inti Dinamika ; PT. Meta Maskana, which builds the Jeruk Purut Town House.

Agribusiness

PT. Ciptani Kurnia Sejahtera, PT. Waringin Agromitra dan PT. Metatani Mandang Sejahtera have oil palm plantations totaling 25,000 hectares in Central Kalimantan and 40,000 hectares in Natuna islands under PT. Meta Epsi Agro.

Food processing industry

PT. Sentralfood Indonusa Corp. has an instant noodle factory with a capacity of 140,000 tons a year with an investment of Rp 40 billion.

The factory produce instant noodle with the brands of Salami and Cintamie. It has a 5% share of instant noodle market in the country.

With two production lines, PT Sentrafood produces at least 300,000 cartons or 12 million packs of instant noodle a month. It instant noodle products with different flavors including soup-based Salam Mie Kari Melayu, and dry based Salam Mie Goreng Jawa and Salam Mie Goreng Abon.

Conclusion

The Medco Group under Arifin Panigoro and his younger brother Hilmi Panigoro is the largest private energy company in the country. It has expanded operation abroad. It foreign operations contribute 20% to its income to be increased to 40% in the next three years.

Medco succeeded in keeping production cost at relatively low level of only US$ 5 per barrels as against around US$ 9-US$ 10 a barrel by other oil companies.

Most oil companies continue exploitation until the wells is almost entirely depleted, but Medco will leave to other areas when a well is almost depleted.

Medco has expanded business to non energy sector although it has made no much progress in those non core business such as in food processing and hotel business.

Many large companies in developing nation are easily tempted to expand operations to non core business facing greater risk.
Parent company PT. MEDCO ENERGY INTERNATIONAL Tbk

Address Graha Niaga, 16th Floor
 JI. Jend. Sudirman Kav. 58
City Jakarta 10270
Phones 021 2505459, 5710630 Hunting
Fax(s) 2,125,055,365,710,620
E-mail medc@medcoenerg.com
Website http://www.medcoenere.com

 MEDCO GROUP
Adress Medco Building III, 3rd Floor
 JI. Ampera Ra a No. 20
 Jakarta 12560
Phone (021) 7821671
Fax (021) 7821771
E-mail medcorp@medcogroup.co.id

Number of companies 72 Companies
Lines of business -Mining:
 Oil &gas exploration and exploitation
 -Industry:
 Steel fabricating industry, petrochemical
 industry, food industry
 -Finance:
 Banking, venture capital, investment holding
 -Property:
 Hotel development
 -Infrastructure:
 Electricity
 -Communication:
 Telecommunication operator
 -Agriculture:
 Palm oil plantation
 -Services:
+ Oil & gas drilling services, general contracting
Estimated sales 1997--Rp 1,500 billion
turnover 1998--Rp 2,086 billion
 1999--Rp 1,876 billion
Chairman --Mr. Arifin Panigoro
Other key persons --Mr. John Sadrak Karamo
 --Mr. Hilmi Panigoro
 --Mr. Hertriono Kartowisastro

List of the group
members

Main members -ANTAREJA HERTRINDO KHARISMA, PT
 (Investment holding)
 -BINAUSAHA JASA MANDIRI, PT
 (Investment holding)
 -BINAUSAHA JASA TRIPUTRA, PT
 (Investment holding)
 -MEDCO ANTAREJA, PT
 (Oil & gas drilling services)
 -META ENERGI PETRASANGA, PT
 (Oil and gas drilling services)
 -META EPSI ENGINEERING, PT
 Engineering contracting)
 -MULTI FABRINDO GEMILANG, PT
 (Steel fabricating and steel structure for oil
 & gas drilling)
 -META EPSI PRIBUMI DRILLING COY., PT
 (Oil & gas drilling services)
 -MEDCO ENERGI CORP., PT
 Holding company, oil and gas services
 -EXSPAN SUMATERA, PT
 (Oil & gas exploration and exploitation)
 -MEDCO METHANOL BUNYU, PT
 Methanol industry)
 -KUJANG EURAPIPE INDONESIA, PT
 Steel pipe industry)
 -SATRIA BALITAMA, PT
 Hotel development
 -BINA INTI DINAMIKA, PT
 Hotel development
 -APEXINDO PRATAMA DUTA, PT
 Oil & gas drilling services
 -CENTRAL ASIA PETROLEUM LTD., PT
 KAZAKHSTAN Oil exploration & exploitation
 -DRAGON OIL PLC., UNITED KINGDOM
 Oil exploitation
Other members MANUFACTURING:
 -SEMEN GOMBONG, PT
 (Cement industry)
 -SENTRAFOOD INDONESA CORP., PT
 (Instant noodle industry)
 -MITRA PUTRA BANGUN, PT
 (Industry)
 -PUSRI MEDCO, PT
 Fertilizer industry)
 -PAUWELS TRAFO ASIA, PT
 (Transformer industry)
 PROPERTY:
 -GRAHAMAS CITRA WISATA, PT
 (Hotel development)
 -GRIYA PANCA KARTIKA, PT
 (Hotel development)
 -INTIGRAHA PRASETYA, PT
 (Property)
 -INTI PERSADA MULTIGRAHA, PT
 (Property)
 -META ARCHIPELAGO HOTELS, PT
 (Hotelry development)
 -META GRAHA CIPTA, PT
 (Housing development)
 -META EPSI SARANA GRAHA, PT
 (Property)
 -GRAHA NIAGA TATA UTAMA, PT
 (Property)
 -META REKSA ADIWISATA, PT
 (Golf course & resort development)
 -META MESKANA, PT
 (Housing development)
 FINANCE:
 -BANK HS 1906, PT
 (Banking)
 -MEDCO CENTRAL ASIA LTD
 (Finance services)
 -MEDCO ENERGI FINANCE OVERSEAS BV,
 (AMSTERDAM) (Finance services)
 -MEDCO DUTA, PT
 (Investment holding)
 -MEDCO INTI DINAMIKA, PT
 (Investment holding))
 -SARANA JABAR VENTURA, PT
 (Venture capital)
 AGRICULTURE:
 --CIPTATANI KUMAI SEJAHTERA, PT
 Plantation
 -META EPSI AGRO, PT Plantation
 -METATANI NATUNA, PT Plantation
 -WARINGIN AGROMITRA, PT
 (Agricultural)
 -METATANI MANDANG SEJAHTERA, PT
 (Agricultural)
 MINING:
 -EXSPAN KALIMANTAN, PT
 (Oil & gas exploration and exploitation)
 -EXSPAN AIRSENDA INC., PT
 -EXSPAN AIRLIMAU INC., PT
 -EXSPAN PASEMAH INC., PT
 -EXSPAN EXPLORATION & PRODUCTION INC, PT
 -EXSPAN TARAKAN INC., PT
 -EXSPAN PETROGAS INTRANUSA, PT
 -EXSPAN CUMI--CUMI, PT
 -EXSPAN ENERGI NUSANTARA, PT
 COMMUNICATION:
 -NUSA TELEKOMINDO INDONESIA, PT
 TRADING:
 -DUTATECH PERSADA, PT
 -EU RAM EGA N IAGASARANA, PT
 -HERTECH KHARISMA, PT
 SERVICES:
 -HITEX NUSANTARA OFFSHORE DRILLING, PT
 (Oil & gas drilling services)
 -SCLUMBERGER GEOGRAPHICS NUSANTARA, PT
 (Oil & gas drilling services)
 -EKSITA PANTRANAGIRI, PT
 (Oil & gas drilling services)
 -ETAKSATRIA PETRASANGA, PT
 (Oil & gas drilling services)
 -CITRA PANJI MANUNGGAL, PT
 (Construction services)
 -ANDRAWINA PRAJA SARANA, PT
 (Catering services)
 -MESITECH MITRA PURNA BANGUN, PT
 (Plant services & maintenance)
 -META ENERGI PANTRANAGARI, PT
 (Oil and as drilling services)
 -EXSPAN PETROGAS INTRANUSA, PT
 (Oil drilling services)
 TOURISM & ENTERTAINMENT:
 -META ADIBOGA, PT (Restaurant services)
 OTHERS:
 -ANTAREJA JASATAMA, PT
 (Land clearing contracting)
 -EXSPAN ENERGI NUSANTARA, PT
 (Power electricity plant)
 -GUARDIAN INDONESIA, PT
 -NUANSA GRAHACIPTA, PT
 (Investment holding)
Overseas companies -SATELLITE OVERSEAS LTD.
affiliated with the (Telecommunication)
group -EXSPAN MYANMAR INC
 (Oil and gas exploration and production)

Source: Medco Energy Tbk

Financial Highlights
PT. Medco Energy Tbk.
 (in Rp million)
 Description 2005 2006
 (31st Dec) (30th Sep)
ASSETS
a. Current Assets 518.8 566.8
b. Non Current Assets 1,016.4 1.274.8
Total Assets 1,535.2 1,841.6
LIABILITIES
a. Current Liabilities 236.7 250.9
b. Non Current Liability 669.2 932.2
c. Equity 629.3 658.5
Total Liabilities + Equity 1,535.2 1,841.6
REVENUES
a. Total Revenue 620.2 792.4
b. Net Profit 74.7 38.2

Source: Financial report of Medco Energy Tbk
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Title Annotation:COMPANY PROFILE
Publication:Indonesian Commercial Newsletter
Article Type:Company overview
Geographic Code:9INDO
Date:Oct 1, 2007
Words:2347
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