Pertamina plans upstream buys this year

Indonesia's state energy firm Pertamina aims to buy overseas oil and gas assets to meet ambitious 2015 output targets and is in talks with ExxonMobil (XOM.N) over an Angolan block.

Pertamina CEO Karen Agustiawan said she expected to sign deals for overseas blocks this year, with funding not a problem to compete with other energy hungry Asian countries seeking assets from Southeast Asia to Africa to ensure supply security.

"When there is sugar, all ants will come," Agustiawan said in an interview for the Reuters Energy and Climate Summit. "Finance is the least problem that we have. It is more toward is there the opportunity, and how sweet is the opportunity, and how small is the risk."

Pertamina raised $1.5 billion from issuing a global bond last month, which could go toward funding a deal for ExxonMobil's 25 percent stake in an Angolan oil block slated to produce around 150,000 barrels per day (bpd) from next year.

"We are in a definitive discussion," said Agustiawan, who started her 27-year career in the industry with Mobil Oil.

The company is also eyeing stakes in 10 oil and gas blocks in countries such as Iraq, Libya, Algeria, Brazil and Vietnam, as it seeks to boost its oil and gas output from 440,000 boepd now to one million by 2015.

"By optimizing what we have domestically, the gap will be about 160,000 boepd," she said. "There is some progress. There will be some signing this year."

Agustiawan said further capital raising to fund its plans could come from listing subsidiaries in the first half of 2011, to tap strong portfolio investor interest in a country on the verge of an investment grade sovereign rating.

The former OPEC member has struggled to attract new direct investment to increase energy production, given policy uncertainty and corruption, leading to declining output at aging fields that has derailed plans to reach output targets.

Indonesia expected to produce 970,000 bpd of oil in total this year, but its energy watchdog said last month that realistically production would be no more than 945,000 bpd.
Agustiawan identified the need for agreement between central and regional governments together with investors and local communities, plus problems in land acquisition and infrastructure development, as hurdles that often led to slow progress on developing resources.

Pertamina's domestic output will be boosted by the ExxonMobil-led Cepu block, in which it owns a 45 percent stake, but Agustiawan said peak production of 165,000 bpd is not expected until the fourth quarter of 2014, delayed from previous expectations of end-2013 or early 2014.

She added Pertamina and ExxonMobil were in talks on how to develop the block's gas given surging domestic industry demand.

GROWING DEMAND
Agustiawan said demand for fuel would keep growing along with growth seen at over six percent in Southeast Asia's largest economy, though she expressed confidence the country could keep meeting export commitments for liquefied natural gas (LNG).

Yet the world's No. 3 LNG supplier is only expected to export 362 cargoes this year, down from 427 last year, and is building several import terminals. It still lacks 1.5 million tonnes a year for a Jakarta receiving terminal from next year.

"We are talking to several suppliers. We are talking to Qatar and Australia," said Agustiawan, a tough talking mother of three who gets up at 4 a.m. daily to run on a treadmill.

The country's dilapidated refineries mean it is also Asia's biggest gasoline importer, and shipments are likely to grow as car sales are hitting record levels. A slew of agreements have been signed with Middle East producers in recent years to build refineries, but work has not started on any new plants.

Agustiawan admitted no new refinery was likely to come onstream in the next five years give the building time lag, and said refining margins were marginal, but was hopeful she would sign a final deal with Kuwait Petroleum Corp (KPC) this year for a refinery of up to 300,000 bpd on the main Java island.

Lawmakers have pushed back plans to wean motorists off cheap subsidized fuel, but Agustiawan did not see the lack of market prices as a limiting factor for refinery investment.

"I think this is a captive market in terms of growth. Energy consumption in Indonesia is going very rapidly," she said. Source: Reuters