September 25, 2018 / 11:02 AM / a year ago

Indonesia's Pertamina backs $100 billion spend to boost oil output

SINGAPORE (Reuters) - Indonesia’s state-owned energy company, Pertamina, needs $100 billion over the next 12 years to boost oil output growth, a senior official said on Tuesday.

A fuel truck passes storage tanks as it departs after loading its cargo at a state-owned Pertamina fuel depot in Jakarta, Indonesia, May 8, 2018. REUTERS/Willy Kurniawan/Files

The spending was required to satisfy Indonesia’s oil demand, Ernie D Ginting, the firm’s vice president of corporate business strategic planning, said during the Asia Pacific Petroleum Conference (APPEC) in Singapore.

Seventy percent of the amount will need to come from external funds and partnerships, she said on the sidelines of the conference.

Pertamina is also looking to acquire oil blocks overseas, she added.

“One of our strategies is to increase our production,” she said. “We are thinking more of Iraq, central Asia.”

Indonesia’s oil output is declining more than the company anticipated, Ginting also said.

“The natural decline is higher than we expected ... but demand is still growing,” she said.

“Our fields are mature, there is no new, huge findings, so we are competing with natural decline.”

Indonesia’s crude oil output has been declining for decades, from a peak of more than 1.5 million barrels per day (bpd) in the mid-1990s, to below 800,000 bpd now, according to industry data.

The country’s failure to attract new foreign investment in the upstream sector has meant that licensing and development drilling have fallen to decade-low levels, Den Syahril, a senior oil analyst at consultancy FGE told Reuters in August.

The $100 billion in capital would go to helping Pertamina meet Indonesia’s growing demand in lieu of this other development activity, she said, adding that partnerships and expertise are needed.

“We cannot do it alone. Even though we got new blocks, it means we also need more capital to develop and maintain them, so therefore we need partnerships,” she said.

Reporting by Jessica Jaganathan and Seng Li Peng; Editing by Richard Pullin, Clarence Fernandez and Tom Hogue

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