Pertamina to issue $1.5 billion bonds

State-owned oil and gas firm PT Pertamina said on Tuesday that it would issue bonds worth US$1.5 billion this year.

?We expect to issue the bonds in the third quarter of this year,? Pertamina's President Director Karen Agustiawan told reporters in Jakarta.

Pertamina is currently in the process of choosing underwriters for the bond issuance. The candidates include Barclays Capital, Credit Suisse, JP Morgan, UBS, Merryl Lynch, CIMB and HSBC.

Karen said proceeds from the bond issuance will be included in the Rp 39 trillion (1US$ = Rp 9,300) capital expenditure (capex) proposed for 2010, which is an increase on the Rp 22 trillion allocated last year. The company plans to use around Rp 26 trillion to expand its upstream activities.

Pertamina projects its oil production will increase by 10.93 percent 193,900 barrels of oil per day (bpd) in 2010 from 174,000 bpd last year. The Cepu block is expected to contribute significantly to the output increase. (*)