Petrochina, Pertamina ink oil cooperation
Petrochina, Pertamina ink oil cooperation
Xu Yihe, Dow Jones, Singapore
China and Indonesia have expanded their energy ties, through a partnership agreement in the upstream oil sector between Indonesia's Pertamina and PetroChina Co., a China-based industry official said Tuesday.
The agreement between Indonesia's state-owned oil and gas company and China's largest oil company will make Indonesia China's largest energy supplier in Asia by 2005.
The two countries are in a position to compliment each other, with China keen to seek overseas oil and gas reserves, while Indonesia needs cash to develop its readily available energy resources, the official told Dow Jones Newswires.
The pact was signed Sunday during Indonesian President Megawati Sukarnoputri's visit to China.
The two countries have also agreed to establish a joint energy forum.
The partnership between Pertamina and PetroChina comes as Chinese oil companies are aggressively seeking opportunities to explore and produce oil and gas overseas to make up for the domestic supply deficit, he said.
The partnership will lead to onshore and offshore oil and gas exploration and development in Indonesia which will likely cost more than US$100 million, he said.
According to another China-based industry official close to PetroChina, PetroChina may acquire a small oil field in Indonesia's Sumatra.
PetroChina and CNOOC Ltd., China's only offshore oil operator, have also expressed interest in bidding for exploration and production rights for 17 onshore and offshore oil and gas blocks that Pertamina will tender later this year.
In addition to direct investment in Indonesia's upstream E&P projects through production sharing contracts, or PSCs, PetroChina plans to provide Indonesia with enhanced oil recovery technology, he said.
China invested in Indonesia's oil and gas industry as early as 1992 when China National Offshore Oil Corp., the parent company of CNOOC Ltd., bought a 39.51% stake in the Malacca field in Indonesia.
The latest acquisition was CNOOC Ltd.'s purchase of five oil and gas projects from Spain's Repsol YPF S.A. in Indonesia in January.
Industry sources said these current ties will pave the way for China to award Pertamina all, or part of, a contract to supply China with liquefied natural gas by 2005.
A Chinese consortium led by China National Offshore has shortlisted Indonesia as one of one of the three potential supply sources for its 3-million-metric-ton s-a-year Guangdong LNG project. Australia and Qatar are the other interested parties.
Pertamina and its PSC partner BP Indonesia will start developing the Tangguh gas field in July, an indication of its confidence in being awarded the contract, which is worth as much as US$500 million a year.
In Beijing, Energy and Mineral Resources Minister Purnomo Yusgiantoro said he is confident the Tangguh project will succeed in a bid for a $10 billion liquefied natural gas supply contract to southern China, Business Weekly reports.
"Indonesia is very optimistic about the bid," Purnomo said speaking after a meeting by Indonesian President Megawati Sukarnoputri with China's leadership during an official state visit. "Indonesia has always been trying to do its best to win the contract."