Bisnis Indonesia
September 13, 2006

JAKARTA: The State Oil Company (PT Pertamina) reveals there are three state banks, namely Bank Mandiri, BRI, and BNI, interested in providing finance to PT Pertamina to develop Cepu block since they consider the block promisingly profitable.

 

However, the state banks have to compete with international banks that are also interested in providing finance to Pertamina. On the other hand, Pertamina will only appint two banks as lead financing banks.

The information was revealed by Pertamina Financial Director PT Pertamina Ferederick S.T. Siahaan to the journalists before the working meeting between the Minister of Energy and Mineral Resources and the House Commission VII on Monday night.

"Informally, the three banks have seriously expressed their interests. We will invite them to submit their proposals," he said.

He targeted that by the end of next month PT would have already been able to appoint the lead financing banks.

"There will be only one or two lead banks. Therefore, state banks can always establish a consortium," he revealed.

Previously, several international banks had also expressed their interests in financing Cepu block, such as Citigroup, JP Morgan, Goldman Sachs, UBS, HSBC, CSFB, and JBIC.

PT Pertamina requires US$560 million to develop Cepu block. As a developing partner in Cepu block, ExxonMobil Oil Indonesia Inc also requires the same amount of funds.

In the plan of development (PoD) of Cepu block proposed by Exxon and Pertamina to the Oil and as Executive Agency (BP Migas), they say that they require US$1.2 billion in total funds to develop Cepu block.

To swell

Ferederick added that it was possible that the investments required to develop the block, which contained oil reserves up to 600 million barrels per day, would develop as the prices of raw materials for mining infrastructure projects are increasing and the international banking interest rate is climbing.

"The investments can swell since the rupiah exchange rate against the US dollar at the moment is different from it was. We submitted the PoD in 2001, so surely there can be changes right now."

Therefore, he continued, Pertamina would propose to revise some articles in the PoD, especially those on development schedule and production target.

Previously, Ferederick disclosed that 40 financial institutions had submitted proposals expressing their interests in financing the development of Cepu block.

The beauty contest to select two leading financial institutions will be made by the end of the year.

He said that it would take around four months to select the leading financial institutions.