DEALTALK-Indonesia energy deals simmer on Asia’s M&A burner

* Chevron gas stake auction is “up and running” – source

* Pertamina eyeing 10 pct stake in Chevron deal – official

* Chatter persists Conoco selling Indonesia assets –
sources
(For more Reuters Dealtalks, click on [DEALTALK/])

By Joseph Chaney and Janeman Latul

HONG KONG/JAKARTA Aug 13 (BestGrowthStock) – Major energy deals are
on the boil in resource-rich Indonesia, regional dealmakers and
analysts say, as Western energy giants seek to raise money for
near-term projects and to pay down debt.

U.S. oil giant Chevron Corp (CVX.N: ) has put portions of its
stakes in the Ganal-Rapak sea gas project near East Kalimantan
on the block, in what could be an $800 million deal.

There’s also talk that ConocoPhillips (COP.N: ), the
third-largest U.S. oil company by market value, is gearing up
to divest parts of its Indonesian businesses, three bankers
with knowledge of the matter said.

All three bankers were unauthorised to speak publicly about
the matter and declined to be named.

Chevron owns 80 pct of the Ganal-Rapak project, and Italy’s
ENI SpA (ENI.MI: ) owns 20 pct. The second-largest U.S. oil
company aims to reduce its holding to roughly 51 percent, said
one of the sources.

The sale process has gained significant momentum since last
November when Chevron first said it was seeking partners in the
project, which is expected to come on line in 2016. There is no
clear time table for the completion of the auction.

“It’s probably five to six years from production, and it
will probably need some capital expenditure so it’s not
everyone’s cup of tea,” an Asia-based investment banker with
direct knowledge of the auction said.

“Chevron’s got a lot of capex commitments in Australia —
they’re trying to get some money and selling some non-core
assets, or reducing their exposure or stakes in these assets.
The process is up and running and everyone is running around
and looking for horses to back.”

Indonesia’s state-owned oil and gas firm PT Pertamina has
said it is interested in taking a stake of at least 10 percent
in the Ganal-Rapak sea gas project.

“If we get the official offer to bid, we will look into it
seriously,” said Mohamad Afdal Bahaudin, Pertamina’s finance
director.

Japanese companies Mitsubishi Corp (8058.T: ) and Mitsui & Co
Ltd (8031.T: ) — who often prefer minority stakes to total
takeovers — as well as PT Pertamina are all likely to bid,
one
of the banking sources said.

A Chevron spokesman in Indonesia told Reuters that the
company “is evaluating partner opportunities for the Indonesia
Deepwater Development Project”.

“The process is ongoing and subject to approvals by the
government of Indonesia. Therefore, we are not disclosing
details related to the process at this stage.”

LONG TIME COMING

Indonesia, a nation of more than 17,000 islands — endowed
with quality coal, oil, gas, and mineral deposits and neighbour
to the world’s neediest resources consumer, China — is fast
growing in stature as a destination for outbound deals and
foreign capital.

Earlier this month, Indonesia’s State Enterprises Minister
Mustafa Abubakar said China Investment Corp (Read more about U.S. companies investment into China) (CIC) — China’s
$300 billion sovereign wealth fund — may invest as much as $25
billion in Indonesia over the long term. [ID:nJAK118383]

Chatter also persists that Chevron competitor
ConocoPhillips is gearing up to divest parts of its Indonesian
businesses, the three banking sources said.

The rumours have been circulating for a long time, and
Conoco has denied such speculation in the past, one banker told
Reuters. Conoco declined to comment on the matter when
contacted by Reuters in Jakarta.

Conoco is in the middle of an asset-selling campaign which
Deutsche Bank estimates could raise a total of $15 billion as
it seeks to reduce debt. [ID:nSGE6660E]

It operates seven production-sharing contracts for oil and
gas in Indonesia, producing a total of 93 million barrels of
oil equivalent per day (MBOED), according to its website.

Local energy players such as PT Medco Energi Internasional
Tbk (MEDC.JK: ) have heard the sale may proceed and are
expressing interest, a Jakarta-based corporate source told
Reuters.

Any deal for either Chevron or Conoco would elevate
Indonesia even higher as an Asian destination for high-profile,
cross-border resources deals.

Last year, BP Plc (BP.L: ) sold its stake in an offshore oil
and gas block in West Java to Pertamina, claiming it no longer
fitted with the company’s long-term strategy.

“It’s a logical move for them (Chevron) to get quick money
and ease their financing burden a little but it has been in the
air for as long as I can remember and I’ll believe it when they
sign something,” said Kurtubi, an independent Jakarta-based
energy analyst, and former employee of Pertamina.

He also thought the Japanese would show strong interest in
the asset given a tendency to pefer minority stakes and a need
to secure resources.

“The Japanese are the most likely buyers for this as this
type of deal suits their business style, guaranteeing the gas
supply,” Kurtubi added.
(Additional Reporting by Muklis Ali in JAKARTA; Editing by
Chris Lewis and Dhara Ranasinghe)

DEALTALK-Indonesia energy deals simmer on Asia’s M&A burner