Business

Pertamina looks to reactivate
Iraqi oil field

(Antaranews.com/Puspa Perwitasari)
(Antaranews.com/Puspa Perwitasari)

State oil and gas firm PT Pertamina is considering reactivating its oil block in Iraq, which has been idle since social upheaval took place in the Middle Eastern country.

“Pertamina won the bid in 2002 for operations in Block 3-Western Dessert in Iraq, but it did not press ahead,” Pertamina president director Karen Agustiawan on Tuesday as quoted by Antara news agency.

“We now want to reactivate the oil field,” Karen said in Jakarta during a public lecture on “Iraq’s Contribution to the World Facing the Global Challenges and Crisis”.

Pertamina, along with Iraqi Oil Exploration Company, won the bid in late 2002, when Saddam Hussein still ruled the country.

But a crisis took place following the fall of Saddam in April 2003, when the United States launched military attacks on the Middle Eastern country, which the US had erroneously accused of keeping weapons of mass destruction.

With Indonesia's economy continuing to grow, the country's energy demand also rises, Karen said.

Therefore, she went on, the government needed to boost national oil and gas supply, with Iraq as a strategic partner.

The lecture was also attended by Iraqi Deputy Prime Minister for Energy Hussain Ibrahim Saleh Al-Shahristani.

He said Pertamina was more interested in operating established oil fields rather than starting from the initial phase of exploration.

Al-Shahristani said Iraq was open to any companies that wanted to operate oil and gas fields in the country as long as they met all the requirements.

He said there were four criteria for companies to participate in a public oil and gas bid: must be a legal entity, with a good financial report; have a big production capacity to match a massive amount of oil that the country’s wells produce; have a good record of security and environmental friendliness; and involve local communities in production.

He said oil and gas tenders were always carried out transparently, with people able to follow their development via TV and the Internet.

According to Al-Shahristani, Iraq applies a 200-year technical service contract, which means operators finance all exploration activities, involve state-owned companies as partners and receive payment based on a “dollar-for-dollar basis, so all oil [exploited] still belongs to the country”.

Such a system, he said, was different from a “production-contract” based mechanism that many other countries used, with operators gaining profits in remunerations from every barrel of oil they produced, while income tax amounted to 35 percent.

He said Iraq had signed US$170 billion worth of contracts with a number of international oil companies to explore 12 oil fields with a production capacity of more than 11 million barrels of oil per day for the next six years.

According to Al-Shahristani, the Iraqi government may earn up to $6.4 trillion in profits from producing 60 billion barrels of oil in the next 20 years, with the price of oil at $75 per barrel.

Producing oil fields have seen an increase in yield from 700,000 barrels of oil per day to 2.3 million barrels of oil per day in 2010, to 3 million barrels of oil per day presently, he said.

Iraq reportedly has proven oil reserves of 143 billion barrels, or 11 percent of the world’s crude oil reserves in total, and gas reserves of 3.5 trillion cubic meters.

Of 78 oil fields in Iraq, nine are classified as super giant oil fields containing reserves of 5 billion barrels each and 23 classified as giant oil fields because they contain around 1 billion barrels each.

Iraq also has three gas fields in Akkas, Mansuriyah and Siba, with a total production capacity of 700 billion cubic meters. Natural gas can be used to run a power plant or to produce petrochemicals. (mtq)

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