Pertamina signs deals for Libyan blocks

Leony Aurora, The Jakarta Post, Jakarta

State oil and gas firm PT Pertamina has signed contracts with Libya to explore and develop two oil and gas blocks, committing US$49.1 million in the first five years of the exploration period.

Pertamina's vice president Mustiko Saleh and National Oil Corporation (NOC)'s chairman Abdullah Al Badri, representing the Libyan government, signed the exploration and production sharing agreements in Tripoli on Dec. 8, Pertamina said in an e-mailed statement on Monday.

Pertamina will spend $49.1 million to conduct seismic tests and drill two wildcat wells in Sirte block in the Sahara desert and another two wells in Sabrata block in the Mediterranean Sea during a five-year exploration period, company spokesman Mochamad Harun said.

Pertamina was one among 19 companies that were awarded tenders in October to explore blocks in Libya, where Africa's largest crude oil reserves lie. The company agrees to receive 8.8 percent of output in Sirte and 11.7 percent in Sabrata, lower than at least 15 percent usually applied in Indonesia.

Libyan evaluation teams have identified eight prospective areas in Sirte with reserves of about 3.5 trillion cubic feet (tcf) of gas and 75 million barrels of oil, Harun said. Sabrata, located next to Sarir, one of Libya's largest oil fields, is expected to hold 400 million barrels of recoverable oil.

Mustiko said on Oct. 11 that Pertamina expected to spend $3.6 billion to develop the blocks over the 30-year contract period under an agreement with Germany's Commerzbank AG. The company will start exploration in both blocks next year and has targeted onstream production to commence in 2009.

The surge in crude prices has prompted oil companies to boost exploration activities to discover more of the fossil fuel. Crude prices in New York touched a record high of $70.85 per barrel on Aug. 30 but have eased to around $60 a barrel in recent weeks.