Local oil companies to raise bank loans worth US$98.6 million

At least five oil and gas companies have proposed to obtain loans totaling about US$98.6 million from local banks to finance their exploration activities either under a technical contract or a joint operation with state owned oil company Pertamina, Bisnis Indonesia reported on Wednesday.

The five companies, according to data provided by the oil and gas division of the Indonesian Chamber of Commerce and Industry (Kadin) include TAC-Babat Kukui Energy, JOB-Suryaraya Teladan, TAC Radeka Sukaraja Eenergindo, TAC-Eksindo Telaga Said Darat and JOB-Energi Inti Persada.

According to Kadin, the five companies were facing problem to raise the bank loans due to the lack of collaterals.

"The lack of collaterals remains a problem for the oil and gas companies in obtaining the loans," said a senior executive of Kadin, Erwin S. Sadirdan. "But we are seeking the possibility of establishing a partnership with a major company such as Medco to cope with the problem," he added.

Under such a partnership agreement, Medco which would act as a parent company, would guarantee the loans to be raised by the five oil and gas companies. "We hope Medco could realize the plan in 2005," said Erwin, who is also assistant to Medco's Chief Executive Officer (CEO). (*)