Tanker trucks wait at a Pertamina oil storage station in Jakarta.
SADACHIKA WATANABE, Nikkei staff writer
Indonesia is Southeast Asia's biggest oil producer, but production has not kept pace with economic growth. Pertamina, a state-run petroleum company, is aiming to improve the supply-demand balance by securing more overseas drilling rights. The country -- also the region's largest by population, gross domestic product and territory -- became a net importer of petroleum a decade ago. The Indonesian economy has been expanding at an annual rate of around 6%, driving up demand for fuel. Domestic oil field development has made little headway, and daily crude production has decreased from 1.34 million barrels in 2001 to around 800,000 barrels in recent years. Domestic oil development is shifting to deeper, farther-flung waters, increasing both costs and risks. From Pertamina's perspective, looking abroad is the sensible thing to do. Last November, the company established a unit called Pertamina International Exploration and Production. This entity is tasked with assessing the profitability of drilling rights the group holds in some 10 overseas locations, as well as interests it might purchase down the road. Since 2012, Pertamina has been working with Korea National Oil and Kuwait Petroleum to develop overseas concessions. By absorbing the expertise of its two partners, Pertamina hopes to "become a leading company in the Asian energy industry by 2025," a company official said. Thanks to brisk sales of oil and gas, Pertamina logged $3.07 billion in net profit for the fiscal year ended December, up 11% on the year. The company intends to focus on expanding refineries for processing the crude oil it imports. Pertamina also plans to use its oil to produce and sell petrochemical materials, such as ethylene, with Thai national oil company PTT. Japanese and other foreign petrochemical makers that do business in Indonesia stand to benefit if Pertamina's efforts reinvigorate the industry. North African pay dirt One promising Pertamina operation lies a month-long voyage away in Algeria. Last year, the Indonesian company bought a stake in an oil concession from ConocoPhillips of the U.S. for $1.75 billion. Pertamina, which owns 65% of one of three drilling lots, handles production and management at the Algerian site. On March 26, a Pertamina tanker carrying crude oil from the project arrived at a port in Lawe-Lawe in eastern Kalimantan, Indonesia. The company wants to procure 20,000 to 30,000 barrels per day from the field. In Iraq, Pertamina owns a 10% stake in a concession in the West Qurna 1 oil field. It purchased the interest from Exxon Mobil of the U.S. last year. https://asia.nikkei.com/
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