Pertamina aims to spend $7.3 billion over 5 years
The Jakarta Post, Jakarta
State-owned oil and gas company Pertamina plans to spend US$7.3 billion in various upstream and downstream projects over the next five years to help it prepare for free market competition in the oil and gas sector, the company said.
Pertamina president Baihaki Hakim said on Monday that the company would grow in size to cope with competition in a market where it is gradually losing its exclusive rights.
Speaking during a presentation on Pertamina's future, he said that for 2003, overall investment would reach $1.34 billion.
Investment would hit $2.08 billion in 2004, $1.51 billion in 2005, $1.25 billion in 2006 and $1.10 billion in 2007, he said.
"These (investment) figures are very much fixed, and if anything, it's the timetable that may change," Baihaki said.
"Some of the planned spending is for ongoing projects that will be carried forward for the next three to four years," he said.
Baihaki cited a number of "big ticket items", projects that require large amounts of investment and for which Pertamina would seek external financing.
One such project is the Donggi gas field in South Sulawesi, he said. The field promises a reserve of about 4.6 trillion cubic feet (tcf), which may turn out to be more once exploration on the site is finalized next year, the paper said.
"The Donggi is one project we can't do with our internal financing. And we do have a number of parties who are interested in it," Baihaki said without elaborating.
Based on his presentation papers, Pertamina puts most of its investment in projects that fall outside routine spending.
Project investment in the upstream sector, covering activities from oil exploration to production, takes up the largest portion.
Meanwhile, spending on Pertamina's downstream projects, such as oil refineries, storage, distribution and trade activities, will gradually decline from $493.3 million to zero by 2007.
Routine spending on both the upstream and downstream sectors has been roughly set at $400 million throughout the five years.
Over the next five years, Pertamina expect to grow its gross profit to Rp 24 trillion (about $2.66 billion) from an estimated Rp 11.9 trillion in 2003. The figure however does not include the government's share of its profit.
In the same period, oil reserves should grow to 1,300 million barrels from 960 million barrels, and gas reserves to 11 tfc from 8.8 tfc, the presentation paper said.
Pertamina is hoping to boost its size in the face of free market competition following the recent implementation of the new oil and gas law. Baihaki said that Pertamina aimed to more than double its enterprise value by 2007, to reach $37 billion from an estimated $15 billion next year.
To this end, the company is betting on expanding its oil and gas productions from fields outside Indonesia. Baihaki added that as part of its expansion drive, he would also consider forming a strategic alliance with Pertamina's Malaysian counterpart Petronas.