Business

Indo Straits spends $15m
to boost oil, gas business

Marine support provider PT Indo Straits (PTIS) will spend up to US$15 million this year to further expand its business in the oil and gas sector, the company’s newly appointed director, Erawan Setyanto, said.

 “There are many opportunities out there and we have the technology. So, now is the time to develop it further,” he said in Jakarta on Friday.

 At the moment, the publicly listed company runs two main businesses, marine logistics and marine engineering. Its marine logistics business provides tugs, barges and transshipment facilities to coal miners in East Kalimantan and South Kalimantan.

Its marine engineering business, Indo Straits, a subsidiary of Singapore-based Straits Corporation Pte. Ltd., carries out dredging, reclamation and various offshore works for oil and gas firms. Marine logistics currently dominates 80 percent of Indo Straits’ business. In total, the company owns and operates more than 40 vessels.

Straits Corporation Group chief financial officer Dwi Prasetyo Suseno, who also sits on Indo Straits’ board of commissioners, said that the company would allocate $15 million in capital expenditures (capex) for the expansion of its oil and gas business

The funds will be mainly used to purchase new vessels and other supporting oil and gas facilities.

About 80 percent of the funds would derive from bank loans while the rest would come from Indo Straits’ internal cash. It had not decided on the number of vessels it would buy as capex disbursement would depend on the requirements of future projects, Dwi said.

“We are still weighing several working offers and project tenders. We have to be cautious since the global market is more volatile than ever now. Marine engineering’s contribution to our business is expected to reach 30 percent by the end of 2013 and will increase again in the next few years,” he said.

 By the year’s end, it hopes its revenues will grow around 17 percent to 30 percent to reach between $50 million and $55 million. This year’s net profits target is set at $5 million, up 25 percent from 2012.

The company also hopes to see the number of its oil and gas client firms grow in 2013. Some of Indo Straits’ clients include Total E&P Indonésie, Chevron Indonesia and Medco Energi. According to Dwi, the company’s decision to develop its oil and gas business was also triggered by the decline of business in the coal mining sector. “Oil and gas is more stable than coal,” he said.

However, even though Indo Straits’ business is currently dominated by coal shipments, it has not suffered from the commodity’s downturn. Dwi estimated that last year’s total revenues rose between 6 percent and 8 percent to reach around $45 million and $46 million,while net profits rose 19.3 percent to $4 million last year.

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