By Tom Wright, Dow Jones Newswires
JAKARTA, Nov. 5 (Dow Jones)

Indonesia’s PT Medco Energi International (P.MCE) said Tuesday it has signed an agreement to pay $570,000 for Continental Energy Yapan Ltd.’s 90% working interest in an exploration block in West Papua province.

Medco said in a statement it has agreed to spend $5 million over the next three years to explore the 9,500-square-kilometer Yapen PSC block, which the company believes could have considerable gas reserves.

The company - which is 34% owned by Thailand’s PTT Exploration & Production PCL (H.PTT) - earlier this year also signed an agreement with Ramu International Ltd. for a 60% working interest in the Rombe Bai Block, also in West Papua.

Medco is planning to increase its production of natural gas to meet rising demand in the Asian region.