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tate oil and gas producer PT Pertamina announced on Tuesday its plan to acquire shares in an oil block in Iraq.

“We haven’t allocated a specific budget for acquisitions in Iraq, but we had already set aside a budget for acquisitions worldwide,” said Pertamina upstream director Muhammad Husein.

The oil from Iraq would be shipped to Indonesia to fulfill growing domestic demand, Husein said, adding that the acquisition was expected to be finalized next year.

This year, Pertamina has allocated Rp 52.8 trillion (US$5.6 billion) to support its operations. Around 80 percent of that budget or Rp 42.24 trillion will go to upstream projects. Out of Rp 42.24 trillion, 30 percent or Rp 12.67 trillion will be set aside for acquisitions.

“Our strategy now is to look for producing blocks and purchase part of their shares rather than to become the operator of the block. The amount of shares will be adjusted to the funds we have available,” he told reporters after a public lecture by Iraqi Deputy Prime Minister for Energy Hussain Al-Shahristani at Pertamina’s office in Jakarta on Tuesday.

Currently, Pertamina holds a contract to explore and develop the Western Desert 3 block in Iraq, which is located 300 kilometers southwest of Baghdad and is estimated to have 3 billion barrels worth of oil reserves.

Pertamina will also finalize a deal to operate the Tuba block, which is predicted to have a total production of 180,000 barrels per day (bpd).

To support the expansion of its international footprint, Pertamina hoped that the government would support it to acquire the blocks it had identified, Husen said. He added that most national oil companies around the globe were fully backed up by their governments.

Iraqi Deputy Prime Minister Al-Shahristani said due to wars, embargos, inadequate investment, an exodus of management and technical personnel and aging infrastructure had produced in a petroleum sector that was far below its potential. Therefore, Iraq intended to invite cooperation with international companies to exploit its oil
resources.

Of the 78 previously discovered oilfields in Iraq, he explained, nine were classified as “super-giants” with more than 5 billion barrels of oil reserves each, while 23 were “giant” fields with over 1 billion barrels each. The cluster of super-giant fields in southeastern Iraq formed one of the largest concentrations of such oil fields in the world, he
emphasized.

Al-Shahristani said Iraq’s Ministry of Oil determined that the most effective path to achieving the important goal of reconstructing Iraq after the US invasion was to take the country’s most prolific fields and cooperate with the world’s most accomplished oil companies for the redevelopment and significant production enhancement of Iraqi state oil companies.

“There were several reasons for this policy decision: The country needed massive investment for reconstruction, and the giant fields that are the core pillars of Iraq’s current oil production offered the best chance of quickly increasing production and generating the required revenues,” he explained.

Although Iraq’s oil production currently hovers around 3 million bpd, the country aims to boost that number to 10 million bpd.