Government Contract
POSCO International announced that it has signed a production distribution contract with the Indonesian government and its state-run oil firm Pertamina Hulu Energi (PHE) in a move to secure the share of oil produced from the Bunga Gas Block. The signing event was held at Tangerang, Indonesia, on July 25. Under the contract, a portion of the oil and gas produced in the block is allocated to the contractor to recoup investment costs, with the remaining portion being shared with the Indonesian government in a predetermined ratio.
This landmark contract grants POSCO International the operating rights in the Bunga Block, encompassing a 6-year exploration period and an additional 30-year development and production phase. The distribution ratio between the Indonesian government and the contractor has been thoughtfully established at 60:40 for oil and 55:45 for gas, ensuring equitable benefits for both parties involved. Notably, 25 percent of the production volume will be dedicated to fulfilling local obligations within Indonesia. The Bunga Block, located in the eastern waters off Java Island, Indonesia, is 14 times the size of the city of Seoul and encompasses large reserves from a depth of 50 meters to 500 meters in the deep sea.
The Bunga Block showcases similarities to the nearby Pagerungan gas field, renowned for its large-scale natural gas production, thereby bolstering the probability of successful exploration efforts. Reuters estimated that the block holds reserves of approximately 1.3 billion barrels of natural gas.
In the future, POSCO International plans to evaluate the potential of the block through 3D seismic surveys until 2026 and make the final decision on exploration drilling in 2027.
On the same day, POSCO International and PHE also signed a memorandum of understanding (MOU) for the Carbon Capture and Storage (CCS) business. Under the MOU, both companies are poised to actively explore and drive forward cutting-edge projects related to CCS, blue hydrogen, and ammonia.