Pertamina to go to Uzbekistan

Pertamina to go to Uzbekistan

JAKARTA (JP): The state-owned oil company Pertamina is to
expand its oil exploration activities to Uzbekistan, a former
Soviet Union republic rich in oil and gas reserves, a company
director said.

"We're sounding out the possibility of oil exploration there.
And the Uzbekistan government has given us a green light,"
Pertamina's director of general affairs, Baharuddin, told the
press yesterday.

Speaking at an orientation gathering with reporters, he said
that his company is likely to sign a memorandum of understanding
with the country in the near future.

"We're also seeking partners to finance the planned oil
exploration as we cannot do it on our own," he said.

According to Baharuddin, if the project is realized, it will
be the company's first oil exploration project abroad.

He said foreign oil exploration is part of the company's
strategy to expand its oil and gas businesses in the future.

He noted that his company will also continue to minimize costs
of production to win competition on the world market. "Now the
trend in the energy businesses is not how much you can sell your
products for to get as big margins as possible but how you can
cut your costs.

Changes

"We also have to monitor changes in domestic and international
markets quickly so that we can devise our own strategy to
compete," he said.

"For the time being we're dealing with a problem posed by
Oman, which is offering its natural gas without a floor price
requirement," he said, adding that "It could become a serious
problem for us in selling our natural gas."

Currently, Pertamina sells its liquefied natural gas (LNG) for
US$3.5 per million British Thermal Units (BTU) with a floor price
of $1.93 per million BTU.

Oman, he said, has already secured a contract to sell four
million cubic feet of gas to South Korea and is now offering its
natural gas to Thailand under a no-floor price arrangement.

Thailand had previously planned to buy gas from Indonesia, who
would pipe it from the Natuna gas field in Riau.

"I don't know whether Thailand will choose gas from Oman or
Indonesia," he said.

He added that Pertamina is exploring the possibility of
exporting its natural gas by pipeline to other members of the
Association of Southeast Asian Nations.

Besides Indonesia, the association comprises Brunei, Malaysia,
the Philippines, Singapore, Thailand and Vietnam.

Baharuddin also said that the state firm is offering swap and
backhaul-trip delivery systems to other oil and gas-producing
countries.

"Under a swap system, if we get a contract to sell gas to
India, for example, we will ask a nearby producing country like
Iran to supply the gas for us under a profit sharing scheme. But
if Iran gets such a contract from Japan, Indonesia will supply
the gas to Japan," he said.

On the backhaul-trip delivery system, he cited Saudi Arabia as
an example. All Saudi tankers transporting LNG to South Korea and
Japan usually return home vacant. "We can charter the ships to
transport our LNG product to our customers in Sri Lanka, for
example, on their way home. This will improve efficiency," he
said. (13)