Reva Sasistiya& Bloomberg

Pertamina plans to allocate about 70 percent of its capital expenses for exploration and production at oil and gas fields next year. (Photo: JG)

Pertamina Eyes $1.1b Bond Sale in April

PT Pertamina plans to issue $1 billion in dollar-denominated debt and Rp 1 trillion ($106 million) in rupiah bonds in April as part of a $2.5 billion financing drive to fund its capital spending next year, a top company official said on Thursday.

Frederick Siahaan, Pertamina’s director of finance, said the state-owned company estimated next year’s capital expenditure at Rp 39 trillion, with plans to allocate about 70 percent for exploration and production at oil and gas fields.

The remainder would be spent on distribution, including renovations to Pertamina gas stations and increasing the size of its storage capacity in remote areas to prevent shortages.

“Aside from the bonds, we are also seeking loans to meet 2010 financing targets,” Frederick said on the sidelines of a hearing at the House of Representatives Commission VII, which oversees the energy sector. “We will sell the bonds after our audited financial report is finished, so this many be in April.”

To expand its upstream operations next year, Pertamina plans to explore its concession in Western Desert Block 3 in Iraq, and develop the 10-11.1 offshore block in Vietnam, under cooperation with PetroVietnam and Malaysia’s Petronas Carigali.

Pertamina president director Karen Agustiawan said on Thursday that it was also interested in buying stakes in additional blocks in Vietnam and Indonesia and increasing its existing stakes.

The company is in talks to buy a 45 percent stake in the Hanoi Trough oil block in Vietnam from Quad Energy.

It is also seeking to acquire 25 percent of the Mahakam gas block in Kalimantan from France’s Total and Japan’s Inpex, and aims to raise its ownership in the West Madura block to at least 60 percent from its current 50 percent. In addition, Pertamina is seeking at least 10 percent of the gas rich Masela block, which is owned by Inpex.

“All the acquisition processes are still under negotiation,” Karen said.

The spending for the upstream sector would also include revamping and upgrading existing production facilities, Frederick added.

As for downstream spending, Pertamina will allocate money for the construction of new gas stations as well as the construction of new storage terminals for liquid petroleum gas to help curb shortages in far-flung regions of the archipelago.

Achmad Faisal, Pertamina’s marketing and sales director, said the company was planning to increase its fuel-storage capacity in Tuban, East Java; Baubau; South Sulawesi; and Tanjung Uban, Riau.

Pertamina projects its oil output for next year to increase to 193,900 barrels per day from 174,800 barrels currently.

Its net income may fall to Rp 15.3 trillion this year compared with Rp 30.19 trillion in 2008 due to lower oil prices this year, Frederick said on Thursday.