JAKARTA: Indonesia's state oil company said Tuesday that Commerzbank, Germany's third-biggest publicly traded bank, would finance a $3.6 billion project over three decades to develop oil fields in Libya as Indonesian output falls.
The fields may produce 340,000 barrels a day, Mustiko Saleh, vice president at Pertamina, told reporters in Jakarta. Commerzbank will be reimbursed for all spending during exploration and get 45 percent of the operators' production share, ranging from 8.8 percent to 11.7 percent.
Libya has proven crude-oil reserves of 39 billion barrels, equivalent to more than five years of U.S. consumption.
Indonesia is straining to meet domestic fuel demand after five years of declines in oil output turned the nation, which is a member of the Organization of Petroleum Exporting Countries, into a net importer of crude and products.
"This is an attempt by Indonesia to try and supplement their oil output because they have not been very successful in inviting foreign investment into their country to boost domestic production," said Arjuna Mahendran, chief economist at Credit Suisse Private Banking in Singapore.
Libya, the eighth-largest producer among the 11 members of OPEC, wants to raise output to three million barrels a day this decade from 1.7 million now.
National Oil, a state-owned company in Libya, will keep 88.3 percent of oil produced at the Sabratah field, leaving 11.7 percent for Pertamina and Commerzbank, Mustiko said. At the Sirte field, National Oil will take 91.2 percent and the overseas venture 8.8 percent.
Pertamina was among 19 companies awarded oil-exploration contracts at an auction held by Libya on Oct. 2. The companies will have to share the production from any field found with National Oil, to which they will pay signing bonuses totaling $103.4 million. Other winners include Exxon Mobil and Eni.
Pertamina and Commerzbank will spend about $2 billion developing the Sabratah offshore block and as much as $1.6 billion on Sirte, Mustiko at Pertamina said. The cost will be spread out over the lifetime of the fields of as long as 30 years, he said. The Libyan government will reimburse all costs during the exploration phase and 50 percent after production begins, Mustiko said.
Pertamina plans to start drilling in Libya by the end of 2006, Mustiko said. The fields may contain as much as one billion barrels of oil, Widya Purnama, president director of the Indonesian state oil company, said on Oct. 7. The company will sign a contract with the Libyan government on Oct. 15, he said.
The Sirte field may contain 400 million barrels of oil, while the Sabratah field may have as much as 690 million barrels of oil, Widya Purnama said.