Saturday, 14 May 2011

Pertamina Said to Consider Swapping Natuna for Angola Oil Stake

PT Pertamina may swap its share in Indonesia’s biggest gas field to help fund a bid for Exxon Mobil Corp. (XOM)’s stake in an Angola oil block, an official at the Jakarta-based energy company said.

Pertamina is the preferred bidder for Exxon’s 25 percent share and is in talks with Cnooc Ltd. (883) on a possible joint bid to help fund the deal, said the official who declined to be identified as the negotiations are private. The Indonesian national oil company may swap its stake in the East Natuna field with Exxon as part of the transaction, and had sent a team to Beijing last week for talks with Cnooc, the person said.

Indonesia, Southeast Asia’s largest economy, is seeking overseas oil assets after a drop in domestic production led to its exit from OPEC in 2008. Pertamina bid about $3.5 billion for Exxon’s stake, the Wall Street Journal reported yesterday, citing a person with knowledge of the matter.

“We’re continuing talks to jointly develop oil blocks abroad, including cooperation with Cnooc in Angola,” Mochamad Harun, vice president for corporate communications at Pertamina, said by telephone from Jakarta, declining to specify the value of the bid. “We’re also talking with national oil companies for joint development of oil blocks abroad.”

Jiang Yongzhi, the Beijing-based spokesman at Cnooc, declined to comment when asked if the company is in talks with Pertamina on a possible joint bid in Angola.

Biggest Acquisition

The purchase of Exxon’s stake in the Angolan block would eclipse PT Berlian Laju Tanker’s $850 million purchase of Chembulk Tankers in 2007 as the largest overseas acquisition by an Indonesian company.

“It’s a good strategy by Pertamina to bring in Cnooc for the Angola bid,” Kurtubi, founder of the Jakarta-based Center of Petroleum and Energy Economics, said by telephone. “Cnooc has a strong capital base and is a well-known energy company,” and the move will help Indonesia secure crude supplies for domestic refineries, said Kurtubi, who goes by one name.

Crude output dropped 2.5 percent to 769,068 barrels a day in April from March, the nation’s oil and gas regulator BPMigas said on May 3. Angola, which vies with Nigeria as Africa’s top oil producer, pumped 1.625 million barrels a day last month.

Indonesia produced 957,000 barrels of oil a day last year, missing its target of 965,000 barrels. The government expects output to reach 952,000 barrels a day this year.

Indonesian Gas Field

The Indonesian government has selected Pertamina, Exxon, Total SA (FP) and Malaysia’s Petroliam Nasional Bhd. to jointly develop East Natuna, estimated to hold 40 percent of the country’s natural gas reserves. The companies may reach a production-sharing agreement in the first half of 2011, Evita Legowo, director general of oil and gas at the Energy and Mineral Resources Ministry, said on Dec. 17.

The field off Borneo’s western coast was discovered in 1973 and Exxon was granted a license to explore for gas seven years later. In 2006, Indonesia revoked the license, saying the U.S. company had failed to provide a feasibility study. Exxon, which had held a 76 percent stake, denied the claim.

Pertamina wants to hold the majority stake in East Natuna and be its operator, Ferederick Siahaan, the company’s former investment planning director, said in December.

East Natuna, previously called Natuna D-Alpha, is estimated by Pertamina to hold 46 trillion cubic feet of gas. That compares with the 112.5 trillion cubic feet of reserves held by Indonesia as of the end of 2009, according to BP Plc (BP/)’s Statistical Review of World Energy.