New oil firm could boost foreign exchange: Arifin

New oil firm could boost foreign exchange: Arifin

JAKARTA (JP): Oil tycoon Arifin Panigoro suggested over the
weekend that the government form a new state oil and gas firm to
raise the badly needed foreign exchange through overseas stock
exchanges.

Arifin, chairman of the Medco Group, said Friday that the
government should inject a portion of its future earnings from
oil and gas production sharing contract (PSC) holders into the
new company.

He said PSC holders currently controlled oil reserves of about
6.4 billion barrels and gas reserves equivalent to 9.9 million
barrels of oil.

"If the government gives the new state firm the same amount it
gives to PSC holders, the new company could raise about US$32.5
billion from international stock markets like the New York and
London stock exchanges."

Currently, the government gets an average of 85 percent of
profits from oil PSC holders and 70 percent from gas PSC holders.

Arifin said that it would not be difficult for an Indonesian
state oil company to list their shares on some international
stock exchanges due to the country's extensive experience in
developing the oil and gas sector.

After raising funds, the government should allocate 10 percent
of the funds, or about $3.25 billion, to the new company to
explore oil and gas reserves in the overseas markets, he said.

"With fresh funds of $3.25 billion, the new oil company is
projected to be able to find new reserves of up to 6.5 billion
barrels."

He said that by going international, the oil company would
boost Indonesia's foreign exchange and develop new oil and gas
reserves.

Arifin, who is currently at the center of an alleged
conspiracy to disrupt national stability, suggested the new oil
firm develop oil businesses in former Soviet countries such as
Kazakhstan, and in Middle East countries.

He said oil and gas taxes on those countries were currently
lower than Indonesia's, but their unstable political condition
had made western countries wary to invest in those countries.

But he was optimistic that the countries would welcome
Indonesian investments, especially in the oil and gas sector due
to the country's experience in the oil business and its Moslem-
majority population.

He noted that his company, Medco Energi, had successfully
developed a US$248 million oil business in Kazakhstan.

The company won a contract to exploit exploration wells
located in Mangistaumunaigaz field with oil reserves of 700
million barrels. (gis)