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)