Pertamina Sets Aside $1b to Buy ConocoPhillips’ Local Assets

Jakarta Globe, Reva Sasistiya, January 25, 2010

State-owned oil and gas company PT Pertamina said on Monday that it has allocated $1 billion to acquire US oil giant ConocoPhillips’ assets in Indonesia and the rest of Southeast Asia.

“We are ready to acquire all of the available assets of ConocoPhillips, not only in Indonesia but also elsewhere in Southeast Asia,” said Basuki Trikora Putra, Pertamina’s vice president of communications. “We have allocated $1 billion for the acquisition plan.”

However, Jacob Kastanja, corporate communications manager for ConocoPhilips Indonesia, said the company did not intend to divest its Indonesian assets.

“ConocoPhilips remains committed to continue its strong business presence in Indonesia. Our assets in Indonesia are not part of the current divestment plan that was announced by our head office late last year,” Jacob said. “As you know, we have just seen North Belut’s first gas and ConocoPhilips is continuing with its plan for exploration drilling in Makassar Strait and Arafura Sea in 2010 and 2011.”

ConocoPhillips revealed in October that it planned to sell off some of its overseas assets over the next two years in a drive to raise $10 billion.

However, Bayu Kristanto, Pertamina’s vice president for mergers and acquisitions, said the company had informed ConocoPhillips of its interest. It is believed that ConocoPhillips’ Indonesia assets are worth $600 million to $700 million.

ConocoPhillips has been active in Indonesia for more than 40 years and operates seven production-sharing contracts. Four of the contracts are offshore projects, including the South Natuna Sea Block B in the Riau islands, the Kuma block in the Makassar Strait and the Amborip VI and Arafura Sea blocks southeast of Maluku province. It also operates three onshore fields, including the Corridor PSC and South Jambi B blocks in Sumatra as well as the Warim block in Papua.

Pertamina is also hoping to acquire the assets controlled by France’s Total in Indonesia, Basuki said. The state-owned company has previously said it is considering issuing dollar bonds worth $1 billion and $1.5 billion next year to finance its acquisition plans.

It has allocated Rp 39 trillion ($4.17 billion) for capital expenditure this year, with plans to allocate about 70 percent for exploration and production.

Pertamina will pump an additional 7,500 barrels a day from new fields as part of a drive to boost output by 8 percent this year.