Pertamina’s Oil Production Costs Still High
Monday, 29 January, 2007 | 14:43 WIB

TEMPO Interactive, Jakarta: PT Pertamina (Persero) has acknowledged that the average costs for producing oil from the fields that it manages are still high.

The high costs are a result of the extremely small economic scale of the fields that Pertamina manages.

Ari Soemarno, the Managing Director of Pertamina, said that the high costs were affected by the aging oil fields and the small economic scale.

“Nevertheless, the high costs of production do not mean that there were markups,” he told Tempo at the end of last week.

Based on data that has been obtained by Tempo, the current average cost of production for Pertamina's oil fields amounts to US$16-20 per barrel.

In fact, there are even oil fields where the production of every barrel of oil amounts to US$30.

The cost of production at Pertamina's oil fields is still high compared to the average cost of US$9 per barrel announced by the Development Finance Controller (BPKP).

According to BPKP's audits between 2002 and 2005, the costs of production were considered high compared to other countries, such as Malaysia where the average cost was only US$3.7.

Ari explained that high costs were not necessarily because of inefficiency.

According to him, matters regarding high costs of production must be observed proportionally.

The high cost of production, Ari said, was an impact of the global oil price rises.

For example, according to him, the cost of renting an oil rig was previously US$30,000 per day, but this has now reached US$300,000 per day.

Ali Nur Yasin