Pertamina plans to acquire Repsol?s interest in Algeria?s MLN block

State-owned oil and gas firm PT Pertamina plans to acquire Repsol SA?s interest in Menzel Lejmat North (MLN) block in Algeria, which if realized will allow the Indonesian company to have 100 percent stake in the asset, reports said on Wednesday.

Pertamina Deputy President Director Ahmad Bambang said on Tuesday that Spain?s Repsol SA was planning to sell its entire 35 participating interest in the MLN block due to financial issues.

?They have plans to sell their participating interest because their financial situation is not doing well. They plan to sell the whole stake,? he said on the sidelines of the 2016 Pertamina Energy Forum as reported by The Jakarta Post.

According to Repsol SA?s most recent financial report, the company?s downstream adjusted net income for fell 42 percent to ?395 million (US$419 million) compared to the same quarter a year ago due to lower refining margins, The Post said.

The MLN block is currently operated by Pertamina, which has a 65 percent participating interest in the block. The block has a production capacity of 50,000 barrels of oil per day (bopd).

Pertamina Finance Director Arief Budiman was quoted by The Post as saying the company estimated its capital expenditure would hover around $5 billion to $6 billion next year. However, Pertamina has yet to include the acquisition of Repsol SA?s shares, and has only accounted for planned acquisitions in Russia and Iran.

?Next year, we have allocated around 60 to 70 percent in the up-stream sector. However, the purchasing of participating interests has not been accounted for. If it is included, the figure will increase,? he said.

Apart from its plan to take on a more dominant role in the Algerian blocks it has a participating interest in, Pertamina recently signed a co-operation agreement with its Algerian counterpart Sonatrach, which allows the two companies to exchange information on liquefied natural gas (LNG) and its downstream products, and to team up and trade in the oil, gas and petrochemical sectors.

The two companies will also be able to conduct joint research and human resources development.

Pertamina aims to amass a large amount of reserves through increased overseas partnerships, acquisitions and takeovers of oil and gas fields with soon-to-be terminated contracts.

The company hopes to boost up-stream production to 1.9 million barrels of oil equivalent per day (boepd) by 2025 from a measly production of 624,000 boepd in 2015. Up to 473,000 boepd is set to be acquired from fields overseas.

Apart from Algeria, Pertamina also has participating interests in several oil and gas fields in Iraq and Malaysia. The overseas fields have been a boon for Pertamina and the rate of production has exceeded initial expectations.

The latest data shows that total overseas, production reached 122,000 boepd, consisting of 86,000 bopd and 20.7 million standard cubic feet of gas per day (mmscfd). The figures are significantly higher than this year?s target of 102,400 boepd and last year?s production rate of 1145,200 mboepd.

Pertamina also recently acquired France-based oil company Maurel et Prom with a purchase of 24.53 percent of Maurel?s shares from Pacifico.

Maurel carries out most of its business in Africa through the exploitation of onshore production assets in Gabon and Tanzania and it also has a 21.37 percent stake in Seplat Petroleum, a leading indigenous operator in Nigeria that produced 43,400 boepd in 2015.(*)