Pertamina chief vows to rise company output

Pertamina chief vows to rise company output

JAKARTA (JP): The new president of state oil and gas company
Pertamina, Baihaki Hakim, vowed on Tuesday to increase the
company's oil output to 100,000 barrels per day (bpd) in two or
three years from 70,000 bpd at present.

He said a large contribution to the output increase would come
from the company's oil fields in South Sumatra.

"We have a potential project in South Sumatra that could
contribute an additional 25,000 barrels per day," Baihaki said
after a ceremony marking the installation of Pertamina's new
board of directors.

Baihaki did not provide details on the South Sumatran oil
projects, but Pertamina said earlier it had discovered oil
reserves in Tepus and Sopa, Prabumulih, South Sumatra, which
could produce 24,000 bpd and 18,000 bpd respectively.

Aside from the Prabumulih oil fields, Pertamina owns and
operates oil blocks in Rantau, North Sumatra, Cepu in Central
Java and Karangampel in West Java.

Pertamina accounts for about 5 percent of the country's oil
output of about 1.2 million bpd.

Tepus, located some 15 kilometers northwest of Prabumulih, has
an oil reserve of 155.86 million barrels and 150.96 billion cubic
feet of gas, while Sopa, 75 kilometers northwest of Prabumulih in
the Baturaja block, has a proven oil reserve of 57 million
barrels.

"I don't want to be too overly optimistic since most of our
oil fields are already old," Baihaki said.

Baihaki said he would push Pertamina to boost exploration and
production activity in its oil and gas fields, which he called
Pertamina's assets.

He hinted, however, that Pertamina would rather carry out
exploration and production on its own than in partnership with
others.

"I want to see Pertamina's assets grow (in value). I want to
see if we can develop the assets by ourselves or in partnership
with others. Why don't we take the profit for ourselves?" he
said.

In the past, Pertamina reportedly "handed over" its productive
fields often to the families and cronies of former president
Soeharto under the so-called technical assistance contracts.

Baihaki, who served as the president of PT Caltex Pacific
Indonesia from 1994 to the end of 1999, was appointed as
Pertamina's president to replace Martiono Hadianto by President
Abdurrahman Wahid on Monday.

CPP

The appointment came amid tough negotiations between Caltex
and Pertamina over share ownership in the Coastal Plains
Pekanbaru (CPP) oil block in Riau.

Caltex's contract on the concession will expire in 2001 and
the government has asked the company to set up a joint venture
with Pertamina, with the majority shares owned by the latter.

Analysts said the appointment of Baihaki would give more
leverage to Caltex's position in the negotiations.

Baihaki dismissed worries that his link with Caltex could
affect the negotiation process.

"I have an emotional connection to Caltex in a proper
context," he said, adding that he was now "carrying Pertamina's
flag" in negotiations with Caltex.

Baihaki said Caltex had agreed to give a majority stake in the
CPP block to Pertamina but the share composition was still under
discussion.

"I've heard that Caltex has accepted Pertamina having a
majority stake, but the share is split ... is still in
discussion," he said.

He added that talks with Caltex were already in its final
stage.

"We're in no hurry to reach a final agreement, especially with
a request from the Riau administration to join the operation," he
said, adding Riau's request for participation in the development
of the block had widened the scope of the current talks of
Pertamina and Caltex.

He said Pertamina was waiting for direction from the
government on the issue.

Caltex, a subsidiary of American firms Chevron and Texaco, is
the country's largest oil producer with an output of about
750,000 bpd.

Baihaki also vowed to streamline Pertamina's bureaucracy and
apply a decentralization program to create a more friendly
environment for investors, and divest Pertamina's noncore and
inefficient subsidiaries.

He also vowed to stamp out corruption, collusion and nepotism
in Pertamina in cooperation with the Attorney General's Office.

Baihaki warned Pertamina's contractors to stop colluding with
corrupt officials in Pertamina.

"We'll give them a chance to cooperate in line with
Pertamina's vision to build a clean and healthy relationship," he
said.

Pertamina was considered one of the most corrupt state
companies for several decades due to the alleged deep involvement
of the families and cronies of Soeharto in its business.

An audit by international auditor PricewaterhouseCoopers
recently discovered $4.69 billion in losses in Pertamina for the
period between April 1996 and March 1998, due to inefficiency and
loss of income opportunities. (bkm)