Pertamina to invest $500m on Cepu project

The Jakarta Post, Tue, 09/23/2008 10:01 AM

State oil and gas company PT Pertamina plans to spend US$500 million next year on an oil and gas project in Cepu, East Java, to be jointly run by U.S. energy giant ExxonMobil Corp.

Pertamina will use internal revenues to fund the project, the company's finance director Frederick Siahaan said Monday.

"Given unfavorable market conditions these days, we will use internal funds to help finance the project," he said.

Pertamina had planned to seek loans of up to $1 billion from foreign banks to finance the estimated $2 billion project.

The company owns 50 percent of the shares in the project, with the remainder held by U.S.-based oil company ExxonMobil, the project operator.

Last year, Pertamina spent $180 million on the project.

The Cepu block holds an estimated 600 million barrels of oil along with 1.7 trillion cubic feet of gas.

The government has set a production target of 10,000 barrels of oil per day by the end of 2008, following an agreement to fast-track the development of the block.