I

ndonesia'€™s state-owned oil and gas firm, PT Pertamina, aims to start reaping oil in the second half of this year from an Algerian oil block it acquired from American giant ConocoPhillips.

'€œThe handover of the block'€™s operations is likely to be completed within the next couple of months,'€ Pertamina'€™s upstream director, Muhammad Husein, said in Jakarta on Monday.

Separately, Ignatius Tenny Wibowo, president director of Pertamina'€™s upstream subsidiary, Pertamina Hulu Energi (PHE), said the business unit would wait for its mother company'€™s go-ahead before starting operations.

He said the Algerian government and Pertamina were still engaged in discussions, as the former had planned to limit oil production from the oil blocks in the country in a bid to protect local assets.

'€œThere will be a certain quota that we [Pertamina] are allowed to produce,'€ said Tenny.

Pertamina would harvest an additional crude oil output of 23,000 barrels per day (bpd) once the Jakarta-based energy firm began operations in Block 405A in the North African country, he said.

Last year, Block 405A produced 35,000 bpd, of which 23,000 bpd went to ConocoPhillips.

In addition, Pertamina will also have the chance to increase its reserves by 100 million barrels of oil following the acquisition.

The block comprises three main oil fields: Menzel Lejmat North, Ourhoud and EMK.

In December last year, Pertamina signed an agreement with Houston-based ConocoPhillips to acquire the latter'€™s Algerian unit, North ConocoPhillips Algeria Ltd '€” which has a 65 percent stake in Menzel, at which the firm was also the operator.

ConocoPhillips Algeria also owned 3.7 percent and 16.9 percent stakes in the Ourhoud and EMK fields, respectively.

ConocoPhillips'€™ partners in the fields include Canada'€™s Talisman Energy, Texas-based Anadarko Petroleum Corp. (APC), Italian oil and gas company Eni SpA and Algeria'€™s government-owned oil company.

Pertamina had agreed to buy the firm'€™s stakes in three Algerian oil fields for US$1.75 billion.

Pertamina'€™s entry into oil-rich Algeria '€” should it go ahead as planned '€” would be the firm'€™s first success in acquiring overseas oil and gas assets after failing to meet its targets in previous attempts.

Last year, Pertamina canceled its plan to acquire US-based oil and gas company Coastal Energy after a disagreement with Coastal'€™s shareholders over the purchase price of the assets, which included oil and gas fields in neighboring Thailand and Malaysia.

The firm'€™s plan to purchase a 32 percent stake in Venezuelan oil and gas firm Petrodelta SA, which belongs to Houston-based Harvest Natural Resources Inc., was also scrapped by the Indonesian government amid a disagreement over the transaction price.

Pertamina aims to seal the acquisition of a total of five overseas oil and gas blocks this year, although it has refused to reveal details due to non-disclosure agreements. This year'€™s acquisitions are expected to boost Pertamina'€™s total production by at least 32,000 bpd of crude oil.

In May, the firm booked a four-fold oversubscription for its offering of global bonds worth $3.25 billion, with the funds being used to finance its overseas acquisition campaign.

As of June this year, Pertamina had produced 207,500 bpd in crude oil, a slight increase from the 195,000 bpd it produced during the same period last year.

This output, however, is still below the firm'€™s production target for the end of this year of 223,000 bpd.

Pertamina is currently the second-largest oil producer in the country behind US-based Chevron, whose output amounts to 40 percent of Indonesia'€™s total oil production.