Indonesia's Pertamina signs $700 mln capex loans

JAKARTA -
Indonesia's state oil and gas firm Pertamina signed on Friday syndicated loans worth $400 million and 3 trillion rupiah ($302.6 million) with local and foreign banks to fund upstream and downstream projects.

The dollar loan involves 16 banks, including Citigroup (C.N) unit Citibank NA, Bank of Tokyo-Mitsubishi UFJ (8306.T) and Sumitono Mitsui Banking Corporation (8316.T), a statement from local lender PT Bank Mandiri (BMRI.JK) said.
Citigroup is lead arranger for the loan.

"We believe this loan facility can speed up Pertamina's expansions and business developments in the future, in line with the strategic target set by the company," Karen Agustiawan, Pertamina's president director, said in a statement.

The $400 million loan has a maturity of three years and would pay 338 basis points above the London inter-bank offered rate (LIBOR), Pertamina Finance Director Ferederick Siahaan said.

Mandiri is lead arranger for the rupiah loan and will lend 1.25 trillion rupiah, while 750 billion comes from PT Bank Negara Indonesia (BBNI.JK), 500 billion rupiah from PT Bank Rakyat Indonesia (BBRI.JK) and 500 billion from PT Bank Central Asia (BBCA.JK).

Siahaan told reporters Pertamina planned to spend 22 trillion rupiah on capital expenditure in 2009, with 65 percent allocated for upstream activities and 35 percent for downstream. The firm is estimated to have invested 17 trillion rupiah in 2008.

"There are many Pertamina projects that need to be financed, including upstream and downstream. Upstream projects include Cepu and the offshore North West Java block," he said.

Pertamina has a 45 percent stake in the Cepu block in East Java, which will become one of Indonesia biggest oil projects with reserves of around 600 million barrels.
Exxon Mobil (XOM.N) has another 45 percent and regional governments hold the remaining 10 percent in Cepu.

Siahaan also said funds were needed to pay for preparations for a new refinery in West Java. Pertamina has said it plans to build a new refinery with a capacity of 150,000 barrels per day (bpd) in a join venture with Iran and Malaysia in West Java. Construction is expected to start next year.

Siahaan also said Pertamina was considering issuing bonds in 2010 as part of its financing plans, but he gave no details.

The state oil firm, which is under political pressure to help boost the country's flagging oil production, has said it aims to lift its oil output by about 10 percent to 171,000 barrels per day this year, up from 156,000 bpd in 2008.

Pertamina also has a long-term target of boosting refining capacity by 700,000 bpd from the current 1 million bpd at its nine refineries. The state oil firm's nine refineries have a combined capacity of around 1 million barrels per day (bpd). But they only supply 70 percent of domestic oil product consumption, and 30 percent comes from imports.

Efforts to build new refineries have stalled in recent years, with potential investors saying the returns are not favourable enough.