Pertamina to cancel bond, tanker procurement; will focus on acquiring upstream assets

State oil and gas company Pertamina said on Tuesday its new board of directors would likely cancel bond issuance and some of the tankers that it planned to procure in order to refocus the company?s operations more toward upstream-heavy, a company official said.

?Pertamina is going focus on E&P business. Pertamina is not a shipping company. So, we are going to cancel procurement of 7 new tankers, but would go on with another six, includes 2 very large crude carriers (VLCC), because procurement contract had been signed,? said new director of finance Alfred Rahimone. Alfred said the cancellation would also mean that the planned bond issuance would most likely be cancelled. ?We have sources of cheaper financing,? he said.

Pertamina is planning to issue US$ 90 million and Rp.225 billion (US$=Rp.8, 300) in bonds to finance the tankers procurement. Pertamina had been planning to reinforce its tanker fleet by ordering 35 new tankers of various sizes within the next few years.

Pertamina had signed contract to build 2 VLCCs with South Korean shipmaker Hyundai Heavy Industries.

Alfred said Pertamina would concentrate to acquire more upstream assets to boost the company?s production capacity. ?Pertamina currently only has own production of 40,000 barrels per day, far less than Medco?s production of around 80,000 BPD. Pertamina would embark on more aggressive mode to acquire oil producing assets,? he said.

Meanwhile, upstream director Bambang Nugroho admitted Pertamina would adopt more aggressive stance to acquire producing upstream assets either in Indonesia or abroad.

In the past Pertamina had been trying to acquire Indonesian assets of foreign oil companies such as YPF Repsol, Devon Energy and Kerr-McGee, but lost in competition with other bidders. (alex)