Pertamina, partner, to spend $3.6b on 2 blocks in Libya
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.