Pertamina, partner, to spend $3.6b on 2 blocks in Libya
Leony Aurora, The Jakarta Post, Jakarta
State oil and gas firm PT Pertamina expects to spend some US$3.6 billion, funded by its German partner Commerzbank AG, on developing its two recently acquired blocks in Libya over their 30-year contract period.
Pertamina expects the Sirte block, located in the Sahara desert, to produce between 190,000 and 200,000 barrels of oil per day (bpd) while the offshore block in Sabratah will yield 40,000 bpd and 435 million standard cubic feet per day (mmscfd) of gas, the company's vice president Mustiko Saleh said on Tuesday.
"Pertamina will work with Commerzbank on the two blocks, with Commerzbank financing the project 100 percent," said Mustiko. In turn, the bank, which will bear the financial risk of exploration up to the development stage, will receive 45 percent of the contractor's production share.
The joint venture will get 11.7 percent of the net revenue from production in Sabratah and 8.8 percent of that from the Sirte block, said Mustiko. Such a split is lower than the at least 15 percent for contractors applied by the Indonesian government in production sharing contracts here.
The Sabratah block in the Mediterranean Sea is estimated to have reserves of 3.5 trillion cubic feet (tcf) of gas and 75 million barrels of oil, and will need $2 billion to be developed.
Sirte is expected to have some 400 million barrels of oil and will require between $1.5 billion and $1.6 billion for exploration and production during the contract period.
Pertamina is among 19 winners of a tender announced on Oct.2 to search for petroleum in Libya, where Africa's largest crude- oil reserves lie.
Other successful bidders include U.S. energy giant ExxonMobil Corp., Italy's Eni Spa and Japan's Mitsubishi Oil Co. Based on the winning bids, the Libyan government will get between 71.5 percent and 92.5 percent of any petroleum produced as well as pocketing signing bonuses totaling $103.4 million.
Pertamina will start drilling in both of the blocks next year, Mustiko said.
"The exploration work in Sirte will start sooner as we already have the equipment for (exploration) work onshore," said Mustiko.
"Onstream production will start in 2009," he added.
The surge in crude prices has prompted oil companies to boost exploration to discover more deposits of the fossil fuel. Crude prices in New York have jumped by 42 percent this year, touching a record high of $70.85 per barrel on Aug. 30.
Pertamina is lagging behind its counterparts in Asia, such as Malaysia's Petronas, in acquiring acreage and producing oil abroad. Many of its smaller as well as aging fields in Indonesia have been left undeveloped, waiting for partners with the necessary financial and technical capabilities to become involved.