Pertamina expects to see 5% decline in net profit

Leony Aurora, The Jakarta Post/Jakarta

State oil and gas firm PT Pertamina expects to see a decline of 5 percent in its unaudited net profit this year to Rp 8.55 trillion (US$855 million), from Rp 8.98 trillion recorded last year, after higher taxes and the government's share are taken from its earnings.

Earnings before tax and the government share should jump by 37.64 percent to Rp 17.73 trillion this year from Rp 12.88 trillion booked last year as global oil prices soared and the rupiah weakened against the greenback, Pertamina president director Widya Purnama, said on Friday.

"In the first semester of the year, we have booked pretax earnings of Rp 8.6 trillion," Widya said.

Pertamina has to give 60 percent of the revenue it receives from selling oil and gas to the government. Last year, the government's share and taxes stood at Rp 3.9 trillion. This year, with oil prices soaring beyond $60 per barrel, they are expected to more than double to Rp 9.18 trillion.

Earnings before interest, tax, depreciation and amortization (Ebitda) in its upstream business in the first six months of 2005 stood at Rp 6.72 trillion, Widya said.

The full-year target from the sector set in the general shareholders meeting was Rp 10 trillion, using the assumptions of $35 a barrel and a rate of Rp 8,600 per U.S. dollar.

"We'll reach Rp 14 trillion (of upstream activities' Ebitda) this year," Widya said. In the first half of the year, the average rate for dollar was Rp 9,368 and the average oil price $49.44.

Pertamina announced its first semester financial and operational performance amid speculation about the replacement of its board of directors, who had disagreed with the government about the settlement reached with U.S. giant ExxonMobil on the Cepu block.

Widya said on Aug. 8 that Pertamina should be the operator of the oil-rich block and requested that the state company get 18 percent of all oil output, bigger than Exxon, which will receive between 6.75 percent and 13.5 percent.

Coordinating Minister for the Economy Aburizal Bakrie said on Wednesday that the board would be replaced later this month. State Minister of State Enterprises Sugiharto cited the company's "poor performance" as the reason behind the replacements.

Widya, meanwhile, said all financial and operational indicators -- as stated in Pertamina's management contract with the government as its shareholder -- were achieved, except on natural gas production cost.

The company's oil production costs in the first semester averaged at $7.5 per barrel, lower than the set standard of $9 a barrel. Processing costs stood at $1.33 per barrel in the same period as compared to the standard of between $1.65 and $1.77 a barrel.

"It's an excellent performance," he said.

The cost of natural gas production in 2005's first semester stood at 70 U.S. cents per million cubic feet, while the standard is 65 cents.

Pertamina has not had its financial performance audited, as the government has yet to determine the initial capital for the company, pending the completion of its asset revaluation.