Indian Oil Corporation, the country's largest refiner, has lost out in the race for acquiring a stake in Indonesia's largest listed oil and gas producer Medco.

The Singapore state investment fund Temasek Holdings won the bid for acquiring 38.4 per cent stake in PT Medco Energi International Tbk. It even outbid Chinese oil major PetroChina, industry sources said.

"Medco was IOC's first major acquisition bid for an oil and gas exploration and production company abroad," they said.

Thailand's PTT Exploration and Production PCL and Credit Suisse First Boston were selling their stake in Medco. PTT Exploration, 65 per cent owned by top Thai energy firm PTT PCL, holds an indirect 34.2 per cent stake in Medco.

Medco averaged 52,600 barrels per day of crude and 98.4 million cubic feet per day of natural gas production in the first half of this year.

"The aggressive Indonesian player, whose shares trade on the Jakarta and Surabaya stock exchanges, fitted the bill for IOC, which was looking for overseas upstream acquisitions with almost $2 billion in its pocket," industry sources said. Medco's current oil output is about half its peak of around 100,000 barrels per day recorded in 2001.