Pertamina Hulu Energi to buy 8 overseas blocks

Posted on May 1, 2012

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Rangga D. Fadillah, The Jakarta Post, Jakarta | Sat, 04/07/2012 2:36 PM

Pertamina Hulu Energi (PHE) says it will buy stakes in eight oil and gas blocks in the Asia-Pacific region to boost production.

PHE, as a subsidiary of state-run oil and gas firm PT Pertamina, would follow the policies of its parent company, PHE president director Salis S. Aprilian told reporters in Jakarta on Thursday.

“[Pertamina’s] upstream directorate chooses which assets to acquire and then PHE will execute the plan. For this year, the blocks may be in the Middle East, Thailand, Vietnam or Myanmar. The location will be in Asia Pacific,” he said.

PHE currently owns shares in oil and gas blocks in seven countries: VIC in Australia, Block 3WD in Iraq, Block SK-305 in Malaysia, Block 3 in Qatar, Block 13 in Sudan, Block 17-3 and Block 123-3 in Libya and Blocks 10 and 11.1 in Vietnam.

As of today, only two out of the nine blocks (in Malaysia and Australia) have begun production activities.

Salis reported that in Malaysia, the company, which was cooperating with Petronas Carigali and Petro Vietnam Exploration and Production (PVEP) Corporation, was negotiating natural gas prices for the SK-305 block.

“According to Malaysian regulations, gas found in an oil field must be sold at a price of below US$1
per million British thermal units [Btu]. All shareholders think that at that price, the development of the block’s gas reserves isn’t economical,” he said.

“The block previously had a total production of 6,000 bpd [barrels of oil per day], but now, the amount has fallen to around 1,000 bpd. Now, we want to develop the gas, but the price isn’t interesting,” he added.

Earlier reports said that the gas price was pegged at 63 US cents per million Btu. The company was now lobbying the Malaysian government to increase the price to between $4 and $5. PHE’s investment at the block is estimated to reach $200 million.

“We’ll meet the Malaysian government on April 17 to continue the discussions on the gas price,” Salis said.

In Iraq and Libya, the company’s exploration activities have been stalled due to security considerations following the recent political upheavals in the two nations.

Pertamina said last month that the acquisition of overseas blocks would increase its production to 91,000 bpd of oil, up 46.8 percent over current production of 62,000 bpd.

The firm canceled plans last year to acquire a 25 percent stake worth $3.5 billion in Block 31 in Angola.

Posted in: Energi