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Moody’s sees Rokan Block takeover by Pertamina as credit positive
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The logo of state-owned oil and gas company Pertamina (Shutterstock.com/Casimiro PT )
M
oody's assistant vice president and analyst Rachel Chua has said the state-owned oil and gas holding company Pertamina’s plan to control Rokan Block, one of the country’s largest crude producing blocks, is a credit positive.
Pertamina will operate the block after the current production-sharing contract with a subsidiary of Chevron Corporation expires in August 2021.
“The award of the Rokan block is credit positive for Pertamina as it will meaningfully boost the company’s hydrocarbon reserve base and production after 2021,” said Chua said in a statement received by The Jakarta Post on Monday.
The company expects to sustain oil production at the Rokan block at 200 thousand barrels per day (kbpd), which is significant as it is equivalent to around one-fifth of its total projected production for 2018.
Chua said Moody’s estimated recoverable reserves to be 900 million barrels assuming average annual production of 120 kbpd over the 20-year contract period. In comparison, Pertamina’s proven reserves in 2018 will be around 3.7 billion barrels of oil equivalent.
She said the addition of the Rokan block to Pertamina’s portfolio would improve the integration between its upstream production and downstream oil refinery intake needs.
Moody’s estimates Pertamina’s upstream oil production, including Rokan, will make up close to 40 percent of its 1.0 million bpd refining capacity, an improvement from the current 35 percent.
“At the same time, we do not believe Pertamina has the balance sheet strength to shoulder the substantial investment cost required to maintain production volumes at the Rokan block. The company estimates total capital expenditure at around US$70 billion over the 20-year,” Chua added. (bbn)
