Pertamina seeks to buy stakes of Inpex Java
Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, Sept. 21 -- Indonesia’s state-owned PT Pertamina is negotiating to buy Inpex Corp.’s stakes in the Offshore Northwest Java (ONWJ) block and the South East Sumatra (SES) block.
“Pertamina wants to acquire Inpex's assets, but negotiations are still private between [the two companies],” said Elan Biantoro, spokesman for BPMigas, Indonesia’s upstream oil and gas regulator. Inpex Corp. subsidiary Inpex Java Ltd. owns a 7.25% stake in the ONWJ block and 13.07% in the SES block.
“Actually Pertamina and Inpex have already reached an agreement, but they need to talk further on price,” said an unnamed source at Pertamina, which has been seeking acquisitions in an effort to boost its production to 700,000 b/d by 2014 from the current 432,000 b/d.
The negotiations follow an announcement earlier this month that in 2011 Pertamina will replace South Korea’s Kodeco Energy Co. Ltd. as operator of the West Madura block, which is located in the Java Sea and produces 21,000 b/d of oil.
Pertamina holds a 50% stake in the block, while China National Offshore Oil Corp. and Kodeco each hold 25%. But under a new contract, Kodeco and CNOOC agreed to transfer an additional 10% stake to Pertamina, giving it a total of 60% and operatorship.
According to state media, Pertamina also is in talks with Total E&P Indonesie whose contract for the gas-rich Mahakam block in East Kalimantan is to expire in 2017.
“Pertamina will definitely get into the block when the contract is extended in 2017. The share composition is still being negotiated with Total,” said a Pertamina spokesman.
The string of acquisitions comes despite an announcement by Pertamina earlier this month of a reduction of its investment target by Rp 18.6 trillion ($2.06 billion) or nearly 42%, to Rp 26 trillion.
“This is due to some external factors, including currency and the government’s decision delay in some projects,” said Ferederick ST Siahaan, Pertamina's director for investment and risk management (OGJ Online, Sept. 2, 2010).
According to analyst BMI, however, Pertamina's appetite for buying upstream assets looks to be unaffected by the budget cut, “due to the fact that its investment target on upstream projects does not include asset purchases, according to Pertamina President Director Karen Agustiawan.”
In May, Agustiawan told the Reuters Global Energy Summit in Jakarta that Pertamina would use “unlimited” funds to finance asset acquisitions in order to achieve its production target. “This suggests that Pertamina will likely hit its output target despite a reduction in upstream project expenditure,” BMI said.
Pertamina holds a 46% stake in the ONWJ block since securing BP's share in 2009. The block produces 26,800 b/d of oil and 205 MMscfd of gas.
The SES block produces 41,000 b/d of oil and is controlled by CNOOC with 65.54%.
Contact Eric Watkins at [email protected].