State oil and gas company PT Pertamina has allocated about Rp 10.2 trillion (about US$1 billion)
for acquisition of new oil and gas blocks in 2010, president director Karen Agustiawan told lawmakers Thursday.

Karen said Pertamina planned to spend about Rp 29.5 trillion on upstream activities, higher than last year’s estimated figure of Rp 15.8 trillion.

“Of the total Rp 29.5 trillion allocated for upstream, as much as Rp. 10.2 trillion is allocated for acquisition of new upstream assets,” Karen said.

Pertamina would focus on expansion by eyeing opportunities for new oil and gas blocks especially those located in Southeast Asia and Australia, she added.

The company particularly aims to acquire oil and gas blocks in Indonesia where contracts have expired. The company has noted that the rights on 24 oil and gas blocks will expire between 2011 and 2020.

Among the blocks that will expire in 2011 are the Bawean block operated by Medco Energy, the Pase block operated by ExxonMobil, and the North Sumatra Block A also operated by Medco Energy.

“Pertamina urges the government to automatically transfer the rights over all expired production sharing contracts to Pertamina,” said Karen, adding that the practice of transferring expired contracts to national oil companies was common in other countries.

Pertamina’s finance director Ferederick ST Siahaan said the company’s total investment was expected to reach Rp 46 trillion this year.

“We hope about 35 to 40 percent of the investment required can be financed from our internal sources,” said Ferederick, adding that the remaining funds would be financed from loans and bonds.

With regard to the plan to issue bonds, Ferederick said Pertamina would issue a note with a total value of between US$1 to $1.5 billion this semester. Pertamina is the most profitable state enterprises, contributing about half of the annual dividend paid by state enterprises to the government.

Pertamina expects to book around Rp 25 trillion in net profits this year, an increase of more than 65 percent from the unaudited profits of 2009. Ferederick said the increase was due to the higher crude price.

The Rp 25 trillion projection was based on the assumption of an Indonesia Crude Price (ICP) at
$65 per barrel with an exchange rate of Rp 10,000 to the US dollar, he added.

Revenues are expected to increase to Rp 386.8 trillion in 2010 from Rp 356 trillion last year, he said.

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