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Medco Energi International, Indonesia’s largest listed oil and gas company, plans to start next year development of an onshore field in the Ghadames basin in Libya after discovering significant oil reserves in the area.

Medco International Ventures Limited — Libya (MIVL), a Libyan subsidiary that is fully owned by Jakarta-based Medco Energi, and its partner, state-controlled Libyan Investment Authority (LIA), will undertake commercial operations in three structures identified as A, D and F in the field known as Area 47.

Both companies have equal ownership on the site.

The declaration would enable Medco and LIA “to commence development of those structures, recover all operating costs, and provide a return on investment to the participating interest holders” in accordance with the exploration and production sharing agreement that the two companies signed in March 2005, Medco Energi said in a statement.

It also entitled Medco Energi and LIA to receive recovery costs amounting to $374.3 million, which represents 98.4 percent of the total exploration costs spent by the two companies.

“Cost recovery will be given once the production begins... the amount will be divided equally with our partner. Our ownership is 50 percent each,” Lukman Mahfoedz, president director and chief executive officer of Medco Energi, told Jakarta Globe in a statement.

In Area 47 Medco Energi and LIA plan to build an $800 million facility with production capacity at 50,000 barrels of oil per day. The site has contingency reserves of 352 million barrels of oil equivalent, according to a 2008 study.

Completion is slated for 2015 with engineering and construction works to commence in 2012 and 2013, respectively. The project will be financed jointly by the National Oil Corporation (NOC), a Libyan state-controlled oil and gas company, Medco Energi and LIA.

MIVL ceased operating in February because of Libya’s civil war but resumed in September.

Regarding Libya’s political stability, Lukman said: “I have witnessed by myself and am very optimistic that the situation in Libya has improved at a very fast pace. We firmly believe that the situation in Libya is now returning to normal, especially after the formation of new government in late November 2011.”

Rebel forces toppled Libyan dictator Muammar el-Qaddafi and established Libya’s National Transitional Council as the new authority.

Medco Energi said that since 2005, MIVL and LIA have drilled 20 exploration wells and 6 appraisal wells in Area 47.

It said that out of the 20 exploration wells, 18 showed oil reserves. The company is committed to carrying out several exploration activities to fully explore the area, Medco Energi said.

Its shares rose 1 percent to Rp 2,475 in Jakarta on Monday.