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)