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tate-controlled oil and gas company PT Pertamina will scale down its expansion plans to cope with the sharp drop in crude oil prices, which has severely affected the company'€™s earnings.

Pertamina upstream director Syamsu Alam said in Jakarta on Wednesday that the company would reduce exploration activities on the company'€™s oil and gas fields in the country in order to be able to slash production.

He said the company would, for example, drill fewer oil wells this year. '€œI want Pertamina EP '€”Pertamina'€™s upstream subsidiary'€” to halt drilling operations in a number of wells [mostly onshore]. We'€™ve found the output target from each well is not economically viable as the current oil price is low,'€ he told reporters after a hearing with the House of Representatives'€™ Commission VI.

He said that with crude oil prices now hovering around US$50 per barrel, half last year'€™s price, Pertamina needed to reduce production costs to below $20 per barrel in order to avoid losses.

Pertamina president director Dwi Soetjipto said Pertamina usually needed between $10 million and $12 million for the exploration of an onshore well and between $40 million and $ 50 million for an offshore well.

Syamsu explained that drilling fewer wells would help his firm slash drilling spending to around Rp 3 trillion ($231.8 million) this year from the initial budget of Rp 5 trillion.

Pertamina suffered a $212.3 million loss during the January-February period this year, a huge slump from around $490 million in net profits during the same two-month period last year.

Pertamina suffered this loss because it had sold oil at a much lower price than it had paid for it. Dwi explained the firm had bought oil last October when the price was relatively high for its inventory stock and sold it in the January-February period when the price was very low.

In a separate development, state-owned gas distribution firm PGN, which saw its net profits drop by 10.15 percent to $722 million last year from $804 million in 2013, said Wednesday that it would not acquire any new gas blocks this year to cut operating costs.

'€œFor this year, we will likely focus more on developing our existing blocks, particularly those inside the country,'€ said Muhammad Wahid Sutopo, PGN investment planning and risk management director.

PGN, through its subsidiary PT Saka Energi Indonesia, acquired 36 percent participation rights in the Shale Gas Fasken area in the US from Texas-based Swift Energy Company in July last year in a transaction worth $175 million.

Wahid said the decision not to acquire any new blocks this year was partly driven by the unfavorable oil price, which had an impact on gas prices.

Market sentiment on the lower oil price as well as on the government'€™s plan to reduce retail gas prices for industrial purposes has affected PGN'€™s share price. The firm'€™s shares, which are traded on the bourse under the code PGAS, dropped by 4.13 percent to Rp 4,410 on Wednesday.

On Tuesday, the Industry Ministry announced that it would slash retail gas prices under a number of scenarios. In one scenario, the retail gas price will be reduced by 10 percent to $9.5 per million British thermal units (mmbtu), with an expected decrease of Rp 8.15 trillion in state revenues, while its tax revenue and economic output are forecast to jump by Rp 12.9 trillion and Rp 72.4 trillion, respectively.