Indonesia's Saka Energi Seeks $500M in Bank Loans to Fund 2016 Growth Plan

PT Saka Energi Indonesia, the upstream oil and gas arm of Indonesia's largest natural gas transportation and distribution firm PT Perusaahan Gas Negara (Persero) Tbk (PGN), is seeking $500 million in bank loans by the end of this year to fund its 2016 expansion plans, a local media reported Monday.

The loan would ease pressure on the PGN's finances, Saka Energi Finance Director Devi Pradnya said, as quoted in the Jakarta Globe report, adding that "up until now, we finance our capital expenditure using shareholder loans and equity. But next year, we will look for financing on our own".

Saka Energi -- an emerging local petroleum firm in Indonesia which operates in the domestic upstream sector dominated largely by national oil company PT Pertamina -- plans to set aside between $400 million and $450 million of the $500 million in 2016 for capital expenditure to press on with development plans for several oil and gas blocks, including Muara Bakau in East Kalimantan and the producing Pangkah block in Central Java. The firm owns an 11.7 percent interest in Muara Bakau and a 100 percent stake in Pangkah, which holds 300 million barrels in oil reserve.

Production from the Muara Bakau block is expected to commence in the fourth quarter of 2017, while recently discovered petroleum reserves in the Pangkah block is projected to raise its oil production to 10,000 barrels of oil per day (bopd) and gas production to between 30 and 50 million standard cubic feet per day (MMscf/d), Saka Energi Chief Operations and Commercial Officer Tumbur Parlindungam told The Jakarta Post Friday.

Saka Energi's growth in its upstream asset portfolio in recent years has raised the firm's oil and gas production. Supplies from its domestic and foreign fields, including a 36 percent stake in the Fasken block in Texas in the U.S., reached 31,000 barrels of oil equivalent per day (boepd) so far this year, exceeding the company's target of 30,000 boepd and far above the 20,000 boepd produced in 2014, Tumbur added.

The company intends to boost revenue contribution to parent firm PGN through an asset expansion program beyond its current holdings of nine blocks, including Fasken. The focus of the expansion is on oil and gas blocks located in the eastern parts of Indonesia and in the U.S.

“We are currently contributing less than 10 percent, next year we expect the contribution to go up to 10-20 percent. In 2019, we hope we can make up half of PGN’s sales,” Saka Energi COCO said in a press conference Thursday, as reported in The Jakarta Post.


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