The representatives of the two countries signed a memorandum of understanding on energy and mineral resources here on Wednesday, thus paving a way for direct crude import to the state.
Jero Wacik, minister of energy and mineral resources said, "Iraq plans to increase its crude production from 3 to 10 million barrels a day in four to five years` time. They are ready to meet our needs for crude. This is a mutually beneficial agreement."
Jero confirmed that the state-owned oil company would follow up the plan with an Iraqi company at the venue which near to the visiting deputy prime minister of Iraq, Hussain Ibrahim Saleh Al-Shahristani.
According to Evita Herawati Legowo, the director general of oil and gas, Pertamina imports 300,000 barrels of crude for its refineries at present. She further added that the crude from Iraq could also be used to meet the needs of the new refinery under-construction in Plaju, South Sumatra, estimated to have a capacity of 300,000 barrels a day.
The crude oil supply to Pertamina`s refineries reached 900,000 barrels a day in 2011, when only 65% of the needs were met by the domestic producers. Direct imports from Saudi Aramco constituted the other 13 percent and imports through Petral were 22 percent. Moreover, the imports through Petral were done through a tender consisting of 30 percent spot and 70 percent futures.
Pertamina`s director of investment planning and risk management, Afdal Bahaudi, meanwhile explained that Pertamina expects to receive the crude from Iraq this year. He said, "We hope we could get 50,000 barrels a year initially." He said Pertamina would soon send a request for crude to a trading company in Iraq. "After that we will talk about the price and specifications," he added.
The government has asked Pertamina to increase direct oil imports to reduce the role of traders in procurement. Besides Iraq, Pertamina has also explored the possibility to conduct direct imports from Venezuela and Kazakhstan.
Evita said Pertamina plans to also acquire oil and gas blocks in Iraq, where it is eyeing a block that has a large production capacity.
Though Pertamina received an approval from the Iraqi government, it must talk to the operator of the block to proceed.
Pertamina`s president director Karen Agustiawan said Pertamina wishes to acquire a 10 percent stake in at least two fields with a production capacity of 2.5 million and 1.8 million barrels a day. "We will soon talk to the operators," she said.
Following the acquisition, Pertamina hopes to produce 430,000 barrels a day from the two fields, she said, adding this was a significant addition to the energy resilience of Indonesia. She said Pertamina will furnish Rp10 trillion in 2012 for the acquisition.(*)