PetroChina, Pertamina may form upstream and refinery JV

State oil and gas company Pertamina said it may agree with PetroChina Co. next month to jointly develop oil fields and build refineries in Indonesia.

Pertamina wants China's second-largest oil refiner to help it maintain and build refineries to process the oil, said Iin Arifin Takhyan, Pertamina's senior vice president for upstream operations. According to Bloomberg, they plan to sign an agreement in Beijing in March.

China, whose demand is expected to gain 4 percent annually during the next three years, wants state oil companies such as PetroChina and rival China Petrochemical Group to find oil abroad as domestic production declines. It would help Indonesia develop refineries to supplement local plants that don't have the capacity to meet domestic demand.

``The agreement may offer PetroChina an inside track to farm into any oil discoveries Pertamina makes in Indonesia'' in exchange for the Chinese company's support on refining projects, said Gordon Kwan, an analyst with HSBC Securities in Hong Kong.

Indonesia, East Asia's only member of OPEC, buys gasoline and other refined oil products from refineries in Singapore and elsewhere to supplement supplies from its own plants.

PetroChina officials declined to comment on a possible agreement.

``We decided to enter this agreement with PetroChina after its officials repeatedly expressed their interest to cooperate with us, especially in oil production,'' Iin said. He said Pertamina plans to sign a non-binding agreement when he and other officials visit Beijing next month. (*)