Pertamina cancels acquisition of Russian oil, gas blocks

State-owned oil and gas firm PT Pertamina has decided to cancel planned acquisition of two oil and gas assets in Russia due to huge tax consequence at home.

Pertamina Upstream Director Syamsu Rizal said on Wednesday that the huge tax burden has made the planned acquisition to be no longer economically feasible for the company.

?We?re facing difficulties in the tax area,? he said, but did not provide further details.

As part of a 2016 deal between Pertamina and Russia?s Rosneft to jointly develop the Tuban oil refinery project in East Java, Pertamina was given opportunity to invest in two of Russia?s oil and gas assets, namely Northern Tip of Chayvo Field (Sakhalin Island) and Ruskoye Field. Rosneft offered Pertamina of 20-37.5 percent interest in the Northern Tip of Chayvo Field project.

Syamsu, however, said that Pertamina is still exploring other overseas acquisition opportunities.

The company is seeking to acquire overseas assets to help ensure future crude supply for the country. Pertamina?s finances, however, have been severely stretched amid other massive projects such as refinery projects at home and planned acquisition of oil and gas blocks in the country. (*)