Govt postpones decision on Pertamina reshuffle

The government has delayed the announcement of a reshuffle within state oil and gas company PT Pertamina, pending a screening of the candidates by an evaluation team and presidential approval.

Minister of State Enterprises Mustafa Abubakar said Friday the evaluation by a team comprising himself, the energy minister, finance minister and chief economics minister was underway.

?We expect the process to finish in the third week of January or at the end of the month at latest," Mustafa said.

Previously Mustafa said Pertamina?s new board of directors would be installed no later than Jan. 15.

He said the government would retain Pertamina's President Director Karen Agustiawan. ?All the candidates have been interviewed, but there is still room for change."

Mustafa said the reshuffle of Pertamina executives is expected to boost the company's performance so that it can book a net profit of Rp 20 trillion (US$2.1 billion) this year. The figure is higher than Pertamina's net profit target of Rp 17.7 trillion, slightly below the estimated Rp 17.8 trillion net profit in 2009.

In 2008, the company booked Rp 30.2 trillion in net profits, or 54.8 percent higher than 2007, thanks to the solid oil price on the international market.

Mustafa previously said the government would scrap the position of vice president director and reshuffle the other director positions. Currently Pertamina?s Vice President Director position is held by Omar Sjawaldy Anwar.

A source said that the government would also add a new directorate to the Pertamina organization chart.

The company expects to boost its oil production by 10.93 percent in 2010. The company estimates that it will produce 193,900 barrels of oil per day (bpd) in 2010 from 174,000 bpd last year. The Cepu block will be expected to contribute significantly to the targeted oil production increase in the coming year.

The company is also planning to issue bonds worth US$1.5 billion. The company has yet to choose several candidates to be underwriters for the bond issuance. The candidates are Barclays Capital, Credit Suisse, JP Morgan and HSBC.

The proceeds from the bonds issuance will be used to finance capital expenditure that is expected to reach Rp 39 trillion this year. Most of the spending will be used to expand its upstream activities.

Pertamina relies heavily on revenue of its two upstream subsidiaries, Pertamina EP and Pertamina Hulu Energi, which manage and develop the company?s oil and gas upstream portfolios through various commercial partnership schemes. (*)