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Indonesia’s state-owned energy company Pertamina needs US$100 billion to boost oil production and meet the country’s oil demand, with 70 percent of this spending expected to come from external funds and partners, Pertamina’s vice president of corporate business strategic planning, Ernie D Ginting, said on Tuesday.
While Pertamina is looking to buy oil assets overseas—in Iraq and central Asia in particular—Indonesia’s own oil production that has been declining for decades, is declining faster than the company has been anticipating, Ginting said on the sidelines of the Asia Pacific Petroleum Conference (APPEC) in Singapore.
“Our fields are mature, there is no new, huge findings, so we are competing with natural decline,” the official said, noting that as domestic production drops, Indonesia’s oil demand continues to grow.
According to industry data, carried by Reuters, Indonesia is currently producing less than 800,000 bpd of oil, nearly halved from the peak of 1.5 million bpd in the mid-1990s.
Pertamina is looking to boost production, but it needs expertise and partnerships, because even if it acquires new blocks, it cannot develop them alone, Ginting said.
In a bid to cut its current account deficit, currently at 3 percent of GDP, Indonesia introduced earlier this month new legislation to prioritize local crude oil production over imported crude oil. The new regulation stipulates that oil and gas operators in Indonesia must first sell their production to Pertamina in Indonesia before considering exports of crude oil.
Indonesia has been looking to cut crude oil imports and bolster domestic production, as oil prices have increased while the country’s finances have deteriorated.
Indonesia recorded a substantial decline in crude oil imports in June this year, down 48.8 percent from its May imports, as Pertamina focused its efforts on growing domestic production amid a falling local currency that made imports costlier, official statistical data quoted by S&P Global Platts showed.
Earlier this month, Indonesia’s currency, the rupiah, reached its lowest level to the U.S. dollar in 20 years amid the emerging markets currency rout.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.