Pertamina to Pay $725 Million for Stake in Venezuelan Firm

Dion Bisara

Pertamina, Indonesia’s state oil and gas company, plans to buy a stake in an oil firm in Venezuela, its first overseas foray in almost a year, as part of a move to boost its dwindling reserves of crude oil and natural gas.

Pertamina’s move to seek the Latin American assets comes after it failed to buy an oil assets in Angola last year.

Jakarta-based Pertamina, which is supervised by the State Enterprises Ministry, 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 concession from the Venezuela government until 2027 over six oil fields with proved reserves of 195 million barrels of oil and 235 billion cubic feet of gas, according to Harvest’s website.

“The acquisition is in line with our strategy to develop upstream business overseas, and to become a world-class oil company,” Karen Agustiawan, Pertamina’s president director, said in a statement on Friday.

Karen noted that Petrodelta’s proven and probable reserves are 486 million barrels of oil equivalent (BOE), citing a report from Ryder Scott, Houston-based petroleum consultant company.

“That’s is larger than Cepu’s reserves, Indonesia largest find the last 10 years,” Karen said. Pertamina and ExxonMobil’s Cepu block in Central Java is estimated to hold 450 million barrels of oil.

Karen said that Harvest and Pertamina had signed a share purchase agreement and were waiting for approval from the Indonesian and Venezuelan governments and a majority of Harvest’s stockholders.

Dahlan Iskan, the State Enterprises Minister, did not respond to questions from the Jakarta Globe regarding the government’s stance on the acquisition.

Harvest said the sale, with a gross value of $725 million, would help the company raise around $525 million after “deductions for transaction related costs and taxes.”

Pertamina vice president Ardhy N. Mokobombang said earlier this month that the company needed to expand abroad in order to increase its energy production to 776,000 BOE per day by 2015, from around 200,000 BOE per day currently. Pertamina now holds total oil and gas reserves of 2.223 billion BOE, Ardhy was reported as saying by Investor Daily.

Pertamina holds exploration assets in seven foreign countries, including Libya, Sudan, Qatar, Iraq and Vietnam.

The state-controlled company has set aside Rp 52 trillion for capital expenditure this year compared with last year’s capital expenditure of Rp 40 trillion.

Indonesia has been trying to boost oil production to 1 million barrels per day since leaving the Organization of the Petroleum Exporting Countries 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 reached 903,400 barrels per day last year, 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 er a.

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 Indonesia.

BPMigas, Indonesia’s upstream oil and gas regulator, said the country’s oil and gas reserves continued to shrink, with oil reserves in 2011 at 4.039 billion barrels.

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.

Earlier this month, just days before he was appointed deputy energy and mineral resources minister, BPMigas official Rudi Rubiandini said that Indonesia’s oil production could hit 904,000 barrels per day this year and 910,000 barrels per day in 2013.