PT Pertamina is preparing a big acquisition this year in a bid to meet its oil and gas production target of 700,000 barrels of oil equivalent per day (boepd) by 2014, the state oil and gas company’s top executive has said.
Pertamina’s president director Karen Agustiawan said in Jakarta on Wednesday that it was necessary to acquire potential oil and gas fields from other operators to enable the company to further boost its oil and gas production rate, which now stands at about 432,000 boepd.
“We have an aggressive target to reach 700,000 boepd by 2014. Now, we are preparing an acquisition which will be bigger than the recent acquisition of BP West Java,”
Karen said on the side lines of the 34th annual conference and exhibition of the Indonesian Petroleum Association.
“We expect to complete the acquisition this year,” she said. But she declined to give further details.
In June last year, Pertamina acquired 46 percent of BP’s stake in the offshore North West Java (ONWJ) oil and gas block in a transaction said to be worth US$280 million.
Pertamina secured BP’s interest in the block by purchasing 100 percent of BP West Java Limited, which is the operator of the ONWJ block and holds a controlling 46 percent stake in it.
Boyke Pardede, acting manager at Pertamina Hulu Energi ONWJ, said the block’s oil output had increased after the acquisition. “Before the acquisition, the output was at 22,000 barrels oil per day [bpd], but now this has increased to between 29,000 bopd and 30,000 bopd,” Boyke said.
Pertamina Hulu Energi ONWJ is Pertamina’s business unit now operating the ONWJ block.
Karen refused to give details on the value of the planned acquisition, but Pertamina has said that it
would allocate Rp 10.1 trillion ($1.1 billion) for oil and gas block acquisitions in 2010.
In February this year, Pertamina urged the government to immediately transfer the rights on 24 oil and gas blocks that will expire between 2011 and 2020 to the company.
The company is especially interested in the gas-rich Mahakam block, operated by France’s Total. Karen said Pertamina was expecting to enter the block anytime soon. Pertamina is also hunting blocks located in Southeast Asia and Australia.
“We are open to domestic and overseas acquisition,” she said.
Karen said that Pertamina had to be more aggressive in finding promising oil and gas blocks for acquisition in order to cope with a shortage of crude oil shortage for the country’s fuel production.
“At present, we need to import more than 300,000 barrels per day of crude oil and we also need to import fuel products,” Karen said.
Pertamina operates its upstream business through two subsidiaries, PT Pertamina Hulu Energi and PT Pertamina EP.
PT Pertamina EP said it would drill 27 exploration wells this year to support the parent company’s target.
“We set a target this year to find reserves of as much as 190 million barrels of oil and 718 billion cubic feet of gas,” Pertamina EP’s vice president for exploration Doddy Priambodo said.
Doddy said the company had also prepared initial activities to explore unconventional gas reserves, including gas shale.
“We are conducting a study to map gas shale reserve locations,” he said.
Pertamina EP operations director Bagus Sudaryanto said earlier that the company’s average daily production in early May had reached 133,700 bpd, higher than this year’s target of 128,000 bpd.
“We are therefore optimistic this year’s target to achieve a daily production rate of 128,000 bpd can be met, although there is a the matter of natural depletion at old fields,” he said.
