Pertamina to issue $500m in bonds for upgrades in September

State oil and gas firm PT Pertamina will issue at least US$500 million worth of bonds in September to fund expansion programs, a senior official says. The Jakarta Post reported on Saturday.

The bond issue will take place after audits of Pertamina?s financial reports ? currently being carried out by international auditor Ernst&Young ? are completed, Pertamina finance director Alfred Rohimone said.

?The audit for 2004 will be wrapped up in May and the one for 2005 in July,? assured Alfred. ?We will conduct the bond issue in September.?

Proceeds from the bond sale, which may be in U.S. dollars, or in a combination of dollar and rupiah, will be used to fund expansion programs, including investment in the much-disputed Cepu oil and gas block, located on either side of the border between East Java and Central Java, with its partner U.S. oil and gas giant Exxon?Mobil Corp.

Pertamina held feasibility road shows in New York and London last year, and said the planned bond issue attracted much interest from prospective investors.

Alfred said Pertamina planned to spend some Rp 8 trillion (US$856 million) on exploration, exploitation and downstream activities.

The company will spend between Rp 400 billion and Rp 500 billion to explore for oil and gas, he added.

Indonesia is in dire need of new oil and gas discoveries, as rising domestic fuel consumption is threatening the country?s status as a net oil exporter.

Pertamina and its partners produced some 131,000 barrels of oil per day (bpd) on average last year, and the company aims to raise output to 149,000 bpd this year.

To increase production, Pertamina plans to cooperate with domestic and multinational firms on some 41 mature fields, which may be able to pump more oil using enhanced recovery methods. (*)