TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Pertamina, CNPC to join hands for oil
China’s fossil fuel giant China National Petroleum Corporation (CNPC) and Indonesia’s energy giant Pertamina will soon have more avenues open for possible cooperation, helping the later gain a larger slice of the world’s oil and gas industry
Change Size
C
hina’s fossil fuel giant China National Petroleum Corporation (CNPC) and Indonesia’s energy giant Pertamina will soon have more avenues open for possible cooperation, helping the later gain a larger slice of the world’s oil and gas industry.
Gong Bencai, CNPC’s Indonesian unit PT PetroChina International Indonesia president, confirmed that the two titans would soon sign a memorandum of understanding (MoU) focusing on asset acquisition and enhanced oil recovery (EOR) in the upstream sector in Indonesia and abroad.
The MoU comes hot on the heels of the recent One Belt, One Road (OBOR) summit held in May in which President Joko “Jokowi” Widodo expressed a desire for greater investment in Indonesia. The summit resulted in CNPC and the Chinese government agreeing that the firm would invest more in Indonesia. “We know that Pertamina is a national company and we are also a national company, and because the two cultures cooperate together very closely, our two national companies should work together too,” he told The Jakarta Post recently. “We have our priorities in technology and financial support, and Pertamina also has priorities because they know more about the geology of Indonesian than us and they have more blocks here.”
CNPC is China’s largest oil and gas producer with a crude oil output of 111.43 million tons per year in China, or 52 percent of the country’s total production, and a natural gas output of 95.48 million cubic meters per year, or 71 percent of China’s total.
The firm also controls oil and gas assets in over 37 countries, according to its official data from 2015. Gong explained that the upcoming MoU will allow Pertamina to review and propose a stake in CNPC’s oil and gas blocks overseas.
Pertamina will have a lot to pick and choose from, with Gong citing an ongoing negotiation between the two firms about an undisclosed oil field in Iraq, which has a daily production rate of 300,000 barrels of oil per day (bopd).
While Pertamina representatives would not offer a comment on the impending MoU, gaining access to more fields overseas may help the firm reach its goal to become a world-class energy company by 2025.
Pertamina currently has assets in 12 countries across the globe, but hopes that foreign acquisitions can contribute around 33 percent to its overall production goal of 1.9 billion barrels of oil equivalent per day (boepd) in the next eight years.
In the first quarter of the year, Pertamina’s total oil production reached 318,000 bopd and gas production settled at 1.9 million standard cubic feet per day (mmscfd).
Gong also noted that the MoU will encompass EOR activities as CNPC sees an opportunity in Pertamina’s hold on many aging fields in Indonesia.
“For example, the Daqing oil field [in Heilongjiang province, China] has been able to maintain a production of 1 million bopd for more than 20 years because of EOR. In Indonesia, production tends to go to the top then drop quickly, but the Daqing field managed to stay at 1 million bopd for 20 years and is only starting to drop a little bit,” he said.
Although it seems that Pertamina stands to gain many benefits from cooperation between the two firms, CNPC also has much to gain from the MoU. PetroChina is currently looking to participate in this year’s tender of 15 oil and gas working areas using the gross split-scheme.
Moreover, it hopes to gain an extension on the production-sharing contract it has with Pertamina’s subsidiaries for the Tuban field in East Java.
While the agreement with PetroChina may help Pertamina increase its grasp on overseas fields, it would have made more sense to seek out similar cooperation with Middle Eastern firms, according to ReforMiner Institute researcher Pri Agung Rakhmanto.
“CNPC is a large company and has a pretty aggressive approach to expansion and penetration in order to fulfill China’s high energy demand. However, the most important thing is to ensure that there is a follow up [to the MoU], which may help Pertamina become a world class energy firm much faster,” he told the Post on Monday.
