Pertamina gets Algeria oil extension deal, eyes LPG

State-owned Indonesian refiner Pertamina has secured a 35-year extension to its contract to develop the Menzel Ledjmet Nord (MLN) oil and gas block in Algeria, which it sees bolstering Indonesia's energy security.

The MLN block in the Sahara desert has a capacity of 35,000 b/d. Oil production from the block averaged 14,875 b/d from January-May, according to Pertamina.

"Acquiring oil and gas blocks overseas with the concept of ‘bring the barrel home' is a strategic step for Pertamina to maintain national energy security," Pertamina's president-director Nicke Widyawati said on 17 June.

Indonesia has set an oil production target of 1mn b/d by 2030. Upstream regulator SKK Migas put the country's oil production for 2022 at 612,000 b/d, below a goal of 703,000 b/d for the year and 660,000 b/d in 2021, Pertamina said.

Widyawati's comments follow the signing of a production-sharing contract between Pertamina, Algerian state-controlled oil firm Sonatrach and Spain's Repsol on 15 June.

Pertamina Algeria EP — a subsidiary of Pertamina Internasional EP (PIEP) — has operated the MLN block since 2014 with a total participating interest of 65pc. PIEP is Pertamina's upstream arm responsible for managing international upstream operations.

Pertamina has also received the green light to build an LPG plant in Algeria, along with the contract extension. The plant will have a capacity of 1mn t/yr and the LPG products will be sent to Indonesia. "With this breakthrough, we hope to reduce LPG imports and strengthen Indonesia's trade balance," Widyawati said.

Indonesia imports 7mn-8mn t/yr of LPG, costing 80 trillion-90 trillion rupiah ($5.5bn-6.1bn) each year, investment minister Bahlil Lahadalia said last year. Indonesian LPG imports totalled 6.51mn t last year, excluding intra-regional trade, up by 4pc from 2021, data from oil analytics firm Vortexa show.

By Reena Nathan