Pertamina to construct LPG plants, eying stake in Cepu
Pertamina to construct LPG plants, eying stake in Cepu
Moch. N. Kurniawan, The Jakarta Post, Jakarta
After successive failures in two recent tenders to acquire oil fields here, state-owned oil and gas company Pertamina is now planning to develop two liquefied petroleum gas (LPG) plants and to acquire a stake in the Cepu Block oil fields as part of its expansion program, company upstream director Iin Arifin Takhyan said.
"We still have the money. We're now concentrating our expansion in these areas because we think they hold the most prospects," Iin told reporters on Tuesday.
Iin said that the two LPG plants would be located at its Prabumulih oil field in South Sumatra and at the Jabung oil field in Jambi.
He said that the new plants would help meet growing LPG demand in the country and overseas.
Iin said Pertamina would set up a joint venture with an American firm to build the US$200 million Prabumulih LPG plant, which would be 70 percent financed by foreign loans.
"We want to have a 51 percent stake in this LPG plant," he said.
Iin said that the $350 million LPG plant in Jambi would be developed by a consortium of five firms including Itochu, Amerada Hess, Devon and Pertamina. He could not name the other consortium member.
He added that part of the financing would also come from foreign loans.
"We have approached Japanese financial institutions to provide the loan," he said.
Iin said that Pertamina was now in negotiations with Mobil Cepu Ltd., the operator of the Cepu Block, over the share acquisition plan.
Mobil Cepu is an affiliate of American firm ExxonMobil. The Cepu Block oil fields are located in Central Java and East Java.
"We expect to realize the plan this year," Iin said.
The Cepu Block, which has recoverable reserves in excess of 250 million barrels of oil, is expected to start producing oil at about 100,000 barrels per day in 2003.
Pertamina previously failed to win bids to acquire oil fields operated by Spanish-Argentinean firm Repsol-YPF and U.S firm Devon Energy. The assets were acquired by Chinese firms CNOOC in the Repsol-YPF tender and Petrochina in the Devon Energy bid.
The expansion program is part of Pertamina's plans to boost production and revenue.
At present, Pertamina produces oil at about 98,000 barrels per day (bpd), and plans to increase its output to 200,000 bpd in the next couple of years.
But there has been speculation that Pertamina intentionally allowed the Chinese firms to win the bids as part of a strategy to obtain a contract from the Chinese government to supply LNG (liquefied natural gas) to China's Guangdong province.
Pertamina is competing with two bidders from Australia and Qatar to win the Guangdong LNG tender.