Pertamina to almost double exploration investment

Pertamina to almost double exploration investment

JAKARTA (JP): State-owned oil and gas company Pertamina said
on Thursday that it planned to almost double its exploration and
production investment from an annual Rp 1 trillion (some US$105
million) to about Rp 1.8 trillion starting next year.

Pertamina's director for exploration and production Gatot K.
Wiroyudo said that the higher investment spending would be used
to boost oil and gas production by optimizing the output of
existing oil fields and finding new ones.

He said that under the plan, Pertamina hoped to double its oil
and gas output from the present 210,000 barrels of oil equivalent
per day to 425,000 barrels of oil equivalent by the year 2005.

"This is an ambitious plan; if we can just meet 70 percent of
our target then that is already an achievement," Gatot told
reporters at a press briefing.

Throughout the five years, he said, Pertamina would spend in
total some Rp 9 trillion for the expansion of its production.

He said that at present, Pertamina's total oil reserves
amounted to 1.4 billion barrel of oil, while gas reserves totaled
2.6 trillion cubic feet.

Gatot explained that by optimizing existing oil blocks,
Pertamina could raise its production rate by about 10 to 30
percent.

To find new oil reserves, he said, Pertamina had signed a
memorandum of understanding with Malaysia's Petronas and Petro
Vietnam to jointly find and develop new oil blocks.

"The chance of finding new oil blocks together is better than
doing it alone," he said.

Under the MoU, the three countries could participate in the
developing of new oil blocks in their respective countries and
abroad.

"We have committed ourselves to spending between $100,000 and
$200,000 for holding joint surveys next year," Gatot added.

Pertamina, he said, had to measure itself up by the standards
of world class oil and gas companies.

Such companies, he said, had production levels of a minimum of
200,000 barrels of oil per day (bpd).

They also owned oil and gas reserves that could last for about
25 years of production.

Gatot added that such companies could make independent
investment decisions and were considered as bankable companies.

Pertamina's production plans come amid concerns that
Indonesia's fast depleting oil reserves will soon turn the
country into a net oil importer.

Despite strong oil prices, the country is unable to meet its
oil quota of 1.38 million bpd as set by the Organization of
Petroleum Exporting Countries (OPEC).

Gatot said that Pertamina's current crude oil production stood
at 1.26 million bpd.

He blamed security problems for preventing Indonesia from
meeting its oil quota.

He said that locals in several regions were preventing
Pertamina from conducting seismic activities for unclear reasons,
while existing operations faced security problems.

PT Caltex Pacific Indonesia had earlier reported that repeated
disputes with its workers and locals had caused oil production to
drop this year by an average of 30,000 barrels per day.

"Technically, we could have achieved an oil output of 1.4
million barrels. But because of security disturbances we failed
to do so," Gatot went on.

According to him, the company could raise its production level
to 1.4 million bpd in the first six months of next year, provided
that conditions were favorable for maintaining normal operations.

Separately, Pertamina's refining director Ariffi Nawawi said
that the state company was interested in buying the Tuban
petrochemical center.

He was referring to the $2.3 billion integrated petrochemical
plant in Tuban, East Java.

The center is operated by PT Trans Pacific Petrochemical
Indotama (TPPI), which the Indonesian Bank Restructuring Agency
(IBRA) is offering for sale.

Developing a petrochemical arm, Ariffi continued, would enable
Pertamina to make use of its naptha products, which it had been
exporting so far.

Pertamina also had plans to utilize the oil residue of its
Dumai refinery in Riau to produce high octane mogas.

Ariffi said that oil residue alone was worth only $15 per
barrel, but if processed to mogas it could be worth $25 per
barrel.

Pertamina, he added, had no plans to build more oil refineries
but expected other investors to continue building them. (bkm)