State oil and gas company Pertamina is finalizing its plan to buy assets in Iraq to boost its oil production.
Muhammad Husein, Pertamina’s upstream director, said the company was in the final stages of acquiring an oil and gas block in Tuba, Iraq.
“Pertamina wants the Tuba oil fields,” Husein said. He did not elaborate.
The news came after Iraqi officials visited Jakarta early this week and asked Indonesian companies to invest in the Persian Gulf nation.
The State Enterprises Ministry has called on state-owned companies to look for business opportunities in Iraq. State-controlled construction company Wijaya Karya has already been involved in a $50 million project there.
Pertamina’s efforts to buy assets in Iraq came after the company expressed interest to buy an oil firm in Venezuela. Pertamina will pay Houston-based Harvest Natural Resources $725 million in cash for a 32 percent stake in Petrodelta, a joint venture between Harvest and state-owned Petroleos de Venezuela.
Petrodelta holds concessions from the Venezuela government over six oil fields with proven reserves of 195 million barrels of oil and 235 billion cubic feet of gas, according to Harvest’s website.
Karen Agustiawan, the president director of Pertamina, described the company’s Venezuelan acquisition as part of a concerted effort to develop its upstream business overseas.
The acquisition would also be part of a plan to become a world-class oil company, she said in a statement last week.
The state-run company has set aside Rp 52 trillion ($5.5 billion) for capital expenditure this year compared with Rp 40 trillion last year.
Indonesia has been trying to boost oil production to 1 million barrels per day since leaving OPEC in 2008, after it became a net importer. Indonesia set its oil production target at 930,000 barrels per day in the state budget this year. The nation’s oil output last year reached 903,400 barrels per day, less than the 945,000 barrels per day set in the state budget. Oil production hit a peak of 1.6 million barrels per day in 1995, during the so-called oil bonanza era.
Many Indonesian oil field reserves are declining, and aging equipment has made operations less efficient.
Oil producers in Indonesia include Pertamina, Chevron Pacific Indonesia and Total E&P Indonesie.
Indonesia’s upstream oil and gas regulator BPMigas expects investment in the oil and gas sector to increase to $20.9 billion this year.
Last year, total investment in the sector was valued at $13.9 billion.