Venture to produce drilling devices

Venture to produce drilling devices

JAKARTA (JP): Petroleum engineering companies PT Welltekindo
Nusantara of Indonesia and Specialty Machine and Supply Inc. of
the United States signed a joint-venture agreement here yesterday
to produce downhole plow control devices for oil drilling.

"The two firms will establish a joint venture which will be
the first company in this country to produce such devices for the
oil mining industry. It will be 70 percent owned by Welltekindo
and 30 percent by Specialty," Welltekindo's president, Ermin S.
Nasution, announced after signing the agreement with Specialty's
president, Harlain Denais.

Ermin said that the joint venture will be capitalized at US$6
million.

He said that 80 percent of Welltekindo's stake in the venture
will be financed with its own equity and the other 20 percent
with loans from the state-owned Bank Negara Indonesia 1946 and
privately-owned Bank Duta and Bank Utama.

Ermin explained that the joint venture will establish a plant
in Cikarang, West Java, which will start production late next
year.

Indonesia currently imports downhole plow control devices,
mostly from the United States.

Welltekindo, set up in 1989, operates as supplier of wireline
equipment, personnel and services in the oil industry. In 1992,
it started to design and manufacture wireline equipment, some of
which is exported to Malaysia.

"Transfer of technology is our main goal in establishing the
joint venture with Specialty Machine. We aim to increase the
local contents of our products from 20 percent in first year of
operation to 80 percent in the fifth year," he said.

Ermin said that during the first year of production, the
venture will sell its products only on the domestic market. In
the second year it will start exporting its products,
particularly to the Middle East.

"We target to sell downhole devices worth US$800,000 during
the first year of production, $1.5 million in the second year,
$2.5 million in the third year, $4 million in the fourth year and
$4.5 million in the fifth year," he said. (13)