Pertamina to concentrate on exploration
Fitri Wulandari, The Jakarta Post, Jakarta
Oil and gas firm PT Pertamina said it would focus on exploration and exploitation activities to boost oil and gas reserves.
"Seventy percent of our activities will be focused on exploration, mainly (for) oil. Pertamina is an oil company. So, we have to explore for oil," Pertamina's finance director Alfred S. Rohimone explained to members of the press on Wednesday.
The rest of their efforts will be focused on downstream activities including fuel refining and distribution.
Alfred said the move aims to increase the company's oil output which at present stood at 30,000 barrels per day (bpd).
Also, he said, it was in line with the change of Pertamina's status into a limited liability company from a quasi profit- making firm last month. The change was consistent with the implementation of Oil and Gas Law No. 22/2001, which aims to liberalize the sector and scrap the company's long-time monopoly.
Alfred explained that during exploration, Pertamina would first search for oil, then gas and geothermal steam.
He said Pertamina was reviewing all projects planned by the previous management to see whether to continue or scrap them. The firm would only continue projects that promise quick yields.
Alfred is part of Pertamina's new management installed by the government late last month to replace the old board led by Baihaki Hakim. The current management is led by president Ariffi Nawawi.
Alfred did not specify the total investment needed by Pertamina to finance its planned upstream activities.
However, he said Pertamina has many options to seek financing for its upstream activities.
Pertamina can raise funds to finance its exploration projects through corporate borrowing, capital markets or by setting up partnerships with other companies.
Pertamina has received many offers from various lenders, including a loan offer amounting to US$250 million from the Islamic Development Bank (IDB),
"Pertamina could also use its own cash to finance its projects. We still have between Rp 7 trillion to Rp 8 trillion of internal funds," he said.
Further, Alfred stressed Pertamina's new management had decided to drop the previous management's plans to purchase 38 tankers. However, it would honor the contracts already signed by the previous management for the purchase of six tankers.
He said Pertamina had hired an independent consultant to examine whether it would be more economical to charter tankers or own them.
"If it is cheaper to own tankers than we will purchase them. But if it is cheaper to charter, then we'll do so," Alfred said.
According to Kompas daily, Pertamina now operates 130 tankers but it only owns 31.
Following Pertamina's decision to drop plans to buy the 38 tankers, the firm has thus scrapped the bond issue plans by its shipping unit, PT Pertamina Tongkang.
Tongkang is finalizing plans to issue rupiah and dollar denominated bonds worth Rp 225 billion (US$26.5 million) and $90 million respectively in the local and international markets.
The unit planned to use the proceeds to purchase a number of tankers.
Alfred said he had notified PT Bahana Securities and PT Citigroup Securities, who were the underwriters for the issue, about the cancellation.
"We also have notified the Capital Market Supervisory Agency (Bapepam) about the cancellation," Alfred said.