Pertamina sees output soaring in two years

The Jakarta Post , Jakarta

State oil and gas company PT Pertamina said on Tuesday its oil output could increase by up to 36 percent over the next two years thanks to increased exploration and exploitation.

During a hearing with the House of Representative's Commission VIII, Pertamina's president Arrifi Nawawi told legislators the firm expected crude output to increase to 140,570 barrels oil per day (bpd) next year and 161,530 bpd in 2005 compared to this year's target of 118,800 bpd.

Last year, the firm produced 100,250 bpd of oil.

Despite the increased output, Pertamina's finance director Alfred Rohimone told reporters the company expected a drop in its pre-tax profit from Rp 14 trillion (US$1.6 billion) to Rp 12 trillion this year due to a decline in various types of revenue.

He said that up to September this year, the company had only managed to make Rp 8 trillion in pre-tax profits.

With less than two months to go before the end of year, Alfred predicted Pertamina would only manage to boost this figure by Rp 4 trillion at most.

"All components on the revenue side are dropping, while expenditure is increasing," Alfred said.

Alfred did not give any details on what was causing the decline in revenue. He only said that the stronger rupiah against the U.S. dollar had contributed to the drop in profit even though oil prices have been increasing.

The company had said earlier that it would put 70 percent of its investment in exploration and production activities. The company plans to spend US$5 billion on investment up until 2008.

Alfred added that the company might issue rupiah denominated bonds on the local market next year after dropping an earlier plan to issue global bonds this year.

"There is still a lot of cash in the domestic market that could be utilized by us," Alfred said as quoted by Dow Jones Newswires.

He added that a dollar bond was "riskier than a rupiah (bond) although a dollar bond pays a lower coupon."

That was the reason why the new management, which took the helm in October, scrapped the former management's plan to issue dollar bonds.

Alfred failed to specify the volume of bonds that would be issued if the plan went ahead.

The company is also seeking loans from local banks such as Bank Mandiri, Bank Negara Indonesia (BNI) and Bank Central Asia (BCA) to help finance capital expenditure of $600 million next year.