Indonesia’s state-owned Pertamina to sign an agreement with National Iranian Oil Company (NIOC)

July 2, 2016 4:00 pm

Pertamina seeks to produce 60,000 barrels per of oil from two Iranian blocks.

Indonesia’s state-owned
Pertamina says it will sign an agreement with the National Iranian Oil
Company (NIOC) next month to develop two oil and gas blocks in

Iran
and Indonesia have stepped up their cooperation, with Pertamina signing
a deal with NIOC in May to buy 600,000 tonnes of refrigerated liquefied
petroleum gas (LPG).
The company now says it will have access to
data about four Iranian blocks under a new agreement to be signed next
month, out of which it will choose two blocks for development.
“There
are two to four blocks that will be evaluated based on the initial
study. Of the four, there are two blocks that will be our priority,”
Pertamina’s upstream director Syamsu Alam said.
Pertamina hopes to
boost production from each block by 30,000 barrels per day as part of
its upstream development plans. The company is considering a capital
expenditure of $5.31 billion this year, of which 72% is for upstream
business, the information provider Platts said.
The company
was once bidding for an exploration and development license for the
Laleh offshore block in Iran but the plan was put on the back burner
after new sanctions were imposed on Iran.
Pertamina is in advanced
talks with Rosneft to acquire a stake in two oil and gas blocks in
Russia in line with Indonesia’s expansion of production portfolios
overseas.
The Indonesian company is currently operating three oil
and gas producing blocks in Iraq, Algeria and Malaysia and plans a
capital expenditure of $2 billion on upstream mergers and acquisitions
this year.
The company is planning to import one million barrels
of Iranian Light crude oil in the third quarter of this year to test the
grade at a refinery in Central Java.
Under the LPG deal signed
during the Indonesian energy minister’s visit to Tehran in May,
Pertamina will take in two cargoes in the fourth quarter of this year,
followed by 12 more cargoes in 2017.
“The shipping from Iran
will strengthen the resilience of national LPG supply,” Pertamina
spokeswoman Wianda Pusponegoro said then of the rising demand for
liquefied petroleum gas.
Energy and Mineral Resources Minister
Sudirman Said has said Indonesia was after long-term oil supply deals
with Iran to meet its rising demand for crude as the Southeast Asian
country is expanding its refineries.
Indonesia is building four
refineries, each with capacities ranging between 300,000 bpd and 350,000
bpd, to cut its dependency on oil product imports.
The country
has recently rejoined the Organization of the Petroleum Exporting
Countries. It currently imports 800,000 to 900,000 barrels per day of
crude oil but officials have said there are higher potentials to go
beyond this level.
Minister of Economic Affairs and Finance Ali Tayyebnia has said Iran can supply Indonesia with 200,000 bpd of crude oil.
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