Pertamina plans 25% increase in upstream investments

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 5 -- Indonesia's PT Pertamina plans to increase its investment by 25% to $2 billion in 2009, with 65% of the increase to finance upstream investment projects.

"The future of the oil and gas industry is in the upstream sector, and we don't want to be left behind," said Omar S. Anwar, Pertamina deputy president director. The company plans to double its investment budget $4 billion by 2012, also with a focus on upstream projects.

According to Omar, Pertamina will allocate 60% of its investment plan to the upstream projects this year and in the future. Projects include the development of existing oil fields, acquisition of oil fields from other operators, and development of natural gas, along with geothermal energy.

"Indonesia has the largest geothermal resources in the world, and this is still underdeveloped because of lack of incentives," Omar said. "We believe that when incentives are right, this sector will pick up, and when that happens, we will already be well-positioned."

Omar said Pertamina will seek outside partners to develop its upstream businesses, joint acquisition, joint management, and joint bidding on new areas, including overseas oil and gas fields.

Despite its emphasis on the upstream sector, Omar said Pertamina would continue to maintain downstream operations, aiming to keep its market share at 60% or so.

"There will be a lot of competition and tighter competition in the downstream sector, and we will continue to maintain our presence as part of our public service obligation," he said.

Omar said major downstream investment projects include the development of liquefied petroleum gas depots, retail outlets, and refineries.

Meanwhile, oil companies that recently won exploration rights for 11 oil and gas blocks in Indonesia have confirmed their intentions of signing the contracts.

"All of them have submitted the confirmation," said Evita H. Legowo, the director of oil and gas at the energy ministry, who said the contracts are scheduled to be signed May 5 at the opening of the 33rd annual conference and exhibition of the Indonesian Petroleum Association.

Indonesia recently announced winners for 11 oil and gas blocks offered in December.