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Indonesia. Major energy deals are on the front burner in Indonesia as Western energy giants seek to raise money for near-term projects and to pay down debt.

US oil giant Chevron 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 is also talk that ConocoPhillips, the third-largest US oil company by market value, is gearing up to divest parts of its Indonesian businesses, according to three bankers with knowledge of the matter.

Chevron owns 80 percent of the Ganal-Rapak project, and Italy’s ENI owns the rest. The second-largest US oil company aimed to reduce its holding to roughly 51 percent, one of the sources said.

The sale process has gained significant momentum since 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 Pertamina has said it was interested in taking a stake of at least 10 percent in the Ganal-Rapak 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 and Mitsui — which often prefer minority stakes to total takeovers — as well as Pertamina, were all likely to bid, one of the banking sources said.

A Chevron spokesman in Indonesia said 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,” he said.

Indonesia, endowed with quality coal, oil, gas and mineral deposits and a neighbor to the world’s neediest resources consumer, China, is fast growing in stature as a destination for outbound deals and foreign capital.

This month, State Enterprises Minister Mustafa Abubakar said China Investment Corp. — that nation’s $300 billion sovereign wealth fund — may invest as much as $25 billion in Indonesia over the long term.

Chatter also persists that Chevron competitor ConocoPhillips is gearing up to divest parts of its Indonesian businesses.

The rumors have been circulating for a long time, and Conoco has denied such speculation in the past. It declined to comment on the matter.

Conoco is in the middle of an asset-selling campaign that Deutsche Bank estimates could raise $15 billion as it seeks to reduce debt.

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

Local energy players such as Medco Energi Internasional had heard the sale may proceed and were expressing interest, a Jakarta-based corporate source said.

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

Last year, BP sold its stake in an offshore oil and gas block in West Java to Pertamina, claiming it no longer fit the company’s long-term strategy.

“It’s a logical move for 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.

However, he thought the Japanese would show strong interest in the asset, given a tendency to prefer minority stakes and a need to secure resources.

“The Japanese are the most likely buyers as this type of deal suits their business style, guaranteeing gas supply,” Kurtubi added.


Reuters