JAKARTA (TheInsiderStories) - State owned energy company PT Pertamina said it will continue to enlarge its overseas assets in order to boost the company’s oil and gas production. To support the move, Pertamina sets capital expenditure of US$5-6 billion this year, portion of this will be used to acquire offshore assets.
The capex will be divided in two, half of which will be spent in upstream sector and the other half for downstream business operation and expansion. “The portion of capex for upstream and downstream will be balanced,” Pertamina Finance Director Arief Budiman said at a press conference, after holding shareholders meeting.
Pertamina has over the past few years continued to expand its overseas assets by buying operating oil and gas blocks from other parties or investing in new oil and gas blocks.
The move has showed positive results as indicated by the increasing contribution of oil and gas production from Pertamina’s international business units. Pertamina’s international unit, PT Pertamina International Explorasi has produced 88,000 barrels of oil in 2016 and gas amounting to 223 MMSCFD.
Director for Upstream Oil and Gas of Pertamina Syamsu Alam said last year Pertamina produces 650,000 barrels of oil equivalent (boepd). Last month, the company decided to expand into Iran in cooperation with NIOC. The NIOC team will visit Indonesia in the near future to discuss Pertamina’s expansion to Iran.
In addition, Pertamina is also seeking to explore oil and gas in Africa and Russia to strengthen its oil and gas production and reserves.
“Although our revenues decline, the EBITDA margin and net profit improves supported by efficiency moves, which allowed Pertamina to save up to US$2.67 billion,” said Pertamina Director Yenni Andayani.
To strengthen its downstream business, Pertamina is currently focusing on upgrading 4 refineries and developing 2 grass root oil refineries, located in Tuban in East Java and Bontang in East Kalimantan. To develop Tuban refinery, Pertamina has decided to partner with Rosneft of Russia, while the partner to develop Bontang refinery is still under selection process.
On Thursday, the shareholder meeting also approved the appointment of Elia Massa Manik as new president pirector of the company.
Results
PT Pertamina, state owned diversified energy company, booked net profit of US$3.15 billion in 2016, up from US$1.42 billion in previous year, mainly boosted by cost efficiency.
The company recorded revenues of US$36.49 billion, fell from US$41.76 billion in 2015 and US$70 billion in 2014, on lower oil price.
Its operating profit rose to US$6.19 billion, from US$3.92 billion, as expenses fell to US$30.29 billion from US$37.84 billion.
As a result EBITDA margin rose to 20.73% from 12.28% in previous year.
The shareholder meeting also agreed to allocate Rp12.1 trillion of the net profit or 29% of the 2016 net profit as dividend paid to the government, which is relatively low. This allows Pertamina to use the earnings to fund its operation and business expansion. (*)