Pertamina studies oil revenue split

Indonesian state oil company Pertamina said on Tuesday it was discussing with the government giving contractors in marginal fields a bigger share of the oil they pump in a bid to boost production.

``The oil split is a key strategic issue for government revenue,'' Pertamina exploration director Gatot Wiroyudo told reporters. "Pertamina and the government are studying it.

``The split in marginal fields can be changed on a case-by-case basis and needs clear policy from the government.''

Desperate to replenish dwindling oil reserves and encourage exploration, Jakarta this month said it would give contractors a bigger revenue share. Existing contracts give 85 percent to the government and 15 to contractors.

``If you ask whether the split can be changed to 75 percent for the government and 25 for oil contractors, the answer is it can,'' said Wiroyudo.

``However, it depends on the government, because reducing the government share means reducing revenue.''

Wiroyudo said Pertamina had already given some oil contractors incentives in marginal fields, including help on interest payments and investment allowances.

Several companies are developing marginal fields, including Spanish-Argentine oil firm Repsol-YPF, two by Unocal and five by Caltex Pacific Indonesia.

Pertamina itself is developing five marginal fields.

``We expect there will be an additional 70,000 barrels per day (bpd) of oil in two years from this development,'' Wiroyudo said.

``We have already a target to produce oil at around 1.32 million barrels per day by the end of this year. But the security problems for Caltex cause us to be pessimistic.''

Security problems

Protests and social unrest have hit Caltex's operations in Sumatra, driving production below the targeted 740,000 bpd.

Another Pertamina official estimated Caltex's output had fallen to about 660,000 bpd from 690,000 bpd last month.

Caltex is jointly controlled by Chevron Corp and Texaco Inc.

Wiroyudo said security problems around the country was the biggest problem confronting foreign firms.

Indonesia, OPEC's only Asian member, produces about 1.30 million bpd, compared with its OPEC quota of 1.36 million.

Mines and Energy Minister Purnomo Yusgiantoro said this month he had ordered Pertamina to give incentives to oil contractors by reducing the government's share of revenue.

``We want a clear signal from government in giving Pertamina authority to change the split. But again we are studying it,'' Wiroyudo said.

Foreign oil companies working in Indonesia under Pertamina's umbrella also include ARCO and Gulf Canada Resources Ltd. (*)