Pertamina raise investment, aims higher profit

Pertamina raise investment, aims higher profit

Fitri Wulandari, The Jakarta Post, Jakarta

State oil and gas company PT Pertamina is planning to increase
its investment for exploration and production next year, which
will be the company's first full year of operation as a limited
liability company.

The company also revealed a number of major projects next
year, including the first offshore drilling in the South Sulawesi
sea.

Pertamina's upstream director Bambang Nugroho said the company
would increase investment for upstream activities to Rp 5.9
trillion (US$698 million) in 2004 from Rp 4.6 trillion.

However, Bambang said, the company would only spend seven
percent on exploration with the remaining 93 percent on other
upstream activities, including oil and gas production.

With increased investment, Pertamina is aiming for higher
production and profit. The company officially became a limited
liability company in September 2003.

Next year, the company plans to produce an average of 141,000
barrels of oil per day (bpd), compared with an average of 119,000
bpd in the first eleven months of this year. Natural gas
production will be up from 914 million standard cubic feet per
day (MMSCFD) to 1,109 MMSCFD.

This year, the company's total production of oil, natural gas
and geothermal steam stands at 285,000 barrels of oil equivalent
per day (BOEPD). It was up 5 percent from 270,000 BOEPD last
year.

The figures include Pertamina's own production and the
company's partners.

"The increase in oil production will come from optimizing
existing production, developing potential findings in South
Sumatra and West Java as well as optimizing the activities of our
partner," Bambang said at a media conference on Thursday.

The company expects an increase in profit next year along with
an increase in production. In 2004, the company will see its
profit before government's share increase from Rp 8.6 trillion
this year to Rp 9.1 trillion.

Of the figure, the government would get the lion's share of 80
percent, with the remaining 20 percent going to the company.

As a limited company, the company now has to compete with
other oil and gas companies without certain privileges or special
treatment provided by the government in the past.

Pertamina controlled for decades exploration, production,
processing, distribution and retailing in the oil and gas sector.

The company has also revealed a number of projects inside and
outside the country to boost its production.

The company plans to acquire 4.28 percent of working interest
in Jabung block, South Sumatra, from Petronas and Petrochina.
Bambang said Pertamina was currently negotiating terms and
conditions for heads of agreement.

For natural gas, Pertamina is planning to supply 15 MMSCFD of
natural gas for the Keramasan power plant in Palembang, South
Sumatra, which is owned by state power firm PT PLN.

Pertamina has completed the drilling of five natural gas wells
in South Sumatra this year, which are expected to produce 150
MMSCFD of gas, beginning May 2006.

This year, the company also found natural gas reserves
amounting to 620 billion cubic feet (BCF) in Randublatung-1A
exploration well in Central Java. The gas will be allocated to
supply Tambaklorok power plant in Semarang, Central Java, owned
by PLN.

In the Donggi block, Southeast Sulawesi, Pertamina found
proven reserves of 2.5 trillion cubic feet (TCF) after drilling
five exploratory wells.

"Exploration activities are being accelerated to find proven
gas reserves of 8 TCF," Bambang said, adding that two onshore and
five offshore exploration wells had been planned in the block
next year.

Internationally, pertamina will work together with Petronas
Carigali and PetroVietnam PSC Supervising Company to operate SK-
305 Block in Malaysia. The company has also formed a Joint
Operating Company with PIDC (Vietnam) and Petronas Carigali to
operate Block 10 and 11-1 in Vietnam.

In addition, Bambang said, the firm's oil and gas exploration
in Block-III Western Desert in Iraq still continues.

Bambang said that as of November 2003, the company had total
oil reserves of 424 million barrels and a natural gas reserve of
3.3 TCF, including a proven reserve of 1.2 TCF.