Pertamina, Petroecuador ink exploration agreement

Ika Krismantari, The Jakarta Post, Jakarta

State oil and gas company PT Pertamina will team up with Ecuador's national oil firm, Petroecuador, for the preliminary exploration of three blocks in the Latin American country.

Witnessed by Indonesian President Susilo Bambang Yudhoyono and Ecuador's President Rafael Correra Delgado, the two state firms on Monday signed a memorandum of understanding on the cooperation at the State Palace in Jakarta.

Later in the day, on the sidelines of a luncheon with Ecuador's president, Pertamina president director Ari H. Soemarno said his company was exploring the possibility of expanding its overseas operation to Ecuador and was set to spend US$50 million during the first year of operation to gather technical data on the three blocks' reserves.

The names of the three blocks, according to Ari, are Guanta, Dureno and offshore Lago Agrio.

Petroecuador executive president Carlos Pareja Yannuzzelli said the partnership with Pertamina was forged to realize the government of Ecuador's goal to increase its oil production.

Ecuador, which was just granted membership to the Organization of Petroleum Exporting Countries during a recent summit in Riyadh, Saudi Arabia, has produced about 500,000 barrels of oil per day this year.

"We will give Pertamina 90 days to gather all the technical data, and after that we hope Pertamina can submit their offer for the actual exploration development plan," Yannuzzelli said.

He said the form of the partnership and the share composition between the two companies in each block would be decided later, pending the results of the preliminary exploration.

Refusing to give exact figures, he estimated the investment for the projects would involve "hundreds of millions of U.S. dollars".

Monday's agreement bodes well to Pertamina's intention to pursue overseas expansion, to help improve its output and global standing.

It just won an oil block in Qatar, in which it holds a 25 percent interest, with partner Wintershall -- the world's largest German-based oil and gas drilling company.

Pertamina is also the operator of two oil blocks in Libya, onshore and offshore, and the holder of a 15 percent share in an offshore oil field in Sudan operated by China National Petroleum Corporation and a local partner.

Commenting on the company's recent bid for an oil block in Iran, Ari said the company had been outbid by other companies.

"However, the Iranian government is still considering having us as its partner on other projects. We are still discussing it," he said.