PT Pertamina plans to spend Rp 39 trillion ($4.15 billion) in 2010

State oil and gas company PT Pertamina plans to spend Rp 39 trillion ($4.15 billion) in capital expenditure in 2010, up by about 77 percent on this year's estimated spending, a director said Thursday.

Ferederick ST Siahaan, Pertamina's finance director, said the company's capital expenditure would increase from Rp 22 trillion, which is the spending estimate for this year, up to Rp 39 trillion in 2010.

"This is our prediction, but we still need approval from the shareholder meeting," Ferederick ST Siahaan, finance director, said.

He added that as much as $2.5 billion of the spending would be secured from loans, including from $1 billion of global (dollar-denominated) bonds and Rp 1 trillion of rupiah-denominated bonds.

"We can only issue the bonds after the financial audit for 2009 is finished. Thus, this will perhaps be in March or April next year," said Ferederick, adding that this was also subject to shareholders' approval.

Pertamina plans to use around Rp 26 trillion, about 66.67 percent of the planned capital expenditure in 2010, investing in upstream activities, he added.

Pertamina president director Karen Agustiawan said the company expected to boost oil production by 10.93 percent next year. The company estimates that it will produce 174,000 barrel oil per day (bopd) this year.

"We expect to increase the production target to 193,900 bopd in 2010," Karen said.

Karen added that the Cepu block was expected to contribute significantly to the targeted oil production increase in the coming year.

"We expect that the Cepu block will start its early production of 20,000 bopd by the beginning of 2010. Of this production, Pertamina expect to get 9,000 bopd," Karen said.

As for gas production, Pertamina expects to increase production from 1,314 million standard cubic feet per (MMSCFD) of gas, which is the 2009' gas production estimate, to 1,370 MMSCFD in 2010.

Ferederick said that Pertamina would also use part of the planned capital spending upgrading existing refineries and on the construction of new refineries.

In the period 2012 to 2016, Pertamina plans to upgrade production capacity at the refineries in Plaju, Cilacap, Balikpapan, Dumai, and Balongan.

It also plans to construct three new refineries, namely the Blue Sky Cilacap refinery in Cilacap, Central Java; the Banten Bay refinery in Banten; and the East Java refinery.

Ferederick said these upstream projects would require investment finance of between $17 billion and 19 billion. "The finance will be prepared next year," he added.

Pertamina has been the most profitable state owned company. This year, the company expects to book as much as Rp 15.39 trillion in profits, a major fall on the Rp 30.195 trillion booked by the firm in 2008, reflecting earlier higher oil prices.

(Alfian , The Jakarta Post)