State-owned energy company Pertamina is finding it difficult to acquire two energy blocks controlled by Russian oil firm Rosneft because of the high acquisition tax the firm has to pay to Indonesian authorities to clinch the deal.
Pertamina will team up with Rosneft to develop the new US$ 15 billion Tuban refinery in East Java. It is projected that the refinery will process 300,000 barrels of oil per day (bopd) once it is completed in 2024.
As part of this partnership, Pertamina has also been looking to acquire a 37.5 percent participating interest in the onshore Russkoye field and a 20 percent interest in the offshore Northern Chayvo Field in Russia.
However, Pertamina’s upstream director, Syamsu Alam, said the company was required to pay a high acquisition tax to the Indonesian government for these two fields, which made the acquisition plan economically unfeasible.
“We tried to discuss this matter with the government, but the problem has yet to be solved. On the other hand, Rosneft can’t wait too long because other parties have also sublnitted offers for those two fields,” Syamsu said recently.
“So we have talked to Rosneft, saying that it is unlikely that we can seal the deal in the near future. Hence, it is up to them if they want to make a deal with other parties.”
Syamsu said it was possible for Pertamina to review other fields from Rosneft, depending on the business-to-business approach between the two. Meanwhile, Pertamina has sent a proposal to the Iranian government-owned National Iranian Gil Company (NIOC) in February to develop two oil and gas fields in Iran, namely the Ab-Teymour and Nansouri Fields.
The two Helds are estimated to contain 1.5 billion barrels of reserves each and are expected to produce 200,000 bopd each. In the lirst six month of 2017, Pertamina’s overseas oil and gas production grew almost 30 percent annually to 152,000 barrels of oil equivalent per day (boepd), while domestic production only climbed 0.2 percent to 540,000 boepd.
The foreign fields produced 104,000 bopd and 291 million standard cubic feet per day (mmscfd) of gas, an increase of 23.8 percent and 47.7 percent, respectively.
In the long run, Pertamina aims to jack up its oil and gas production to 1.9 million boepd by 2025, 34.2 percent of which will come from its overseas fields Pertamina’s decision to be more aggressive in overseas territories has come in the Wake of declining national oil production and ever-growing fuel consumption.
Within the hrst six months of this year, Pertamina’s fuel sales increased by 4 percent to 32.6 million kiloliters year-on-year. Premium gasoline, which has a research octane number (RON) of 88, accounted for 57.6 percent of total sales, while the rest came from Pertamina’s Perta Series gasoline, including the RUN-90 Pertalite and the RON-92 Pertamax.
In 2015, the government every three months evaluated the prices of Premium, subsidized diesel Solar and kerosene in accordance With the levels of global oil prices.
However, since April 2016, the government has maintained the prices at Rp 6,450 (49 US cents) per liter for Premium, Rp 5,150 per liter for Solar and Rp 2,500 per liter for kerosene, despite an upward trend in global oil prices. Because of this, Pertamina has had to sell Premium and diesel at a loss because it provides subsidies worth Rp 1,200 per liter for diesel and Rp 400 per liter for Premium.
“In the first half of 2017, the external environment was still highly volatile with increasing global oil prices. The price increase Was a great incentive for our upstream business, but it also led to the soaring cost of goods sold in our downstream business, affecting our net profits in the process,” Pertamina president director Elia Massa Manik said.
Pertamina’s revenues climbed by 19 percent to $20.5 billion during the first half of the year, but its net profits plummeted by 24 percent to $1.4 billion.
Jakarta Post, Page-13, Friday, August 18, 2017
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