SK Energy, Pertamina to Explore in Mideast, Indonesia

SEOUL, Jul 25, 2007 (Dow Jones Commodities News)

South Korea's SK Energy (096770.SE) and Indonesian state-owned oil company PT Pertamina will begin exploring at least three oil fields in the Middle East and Indonesia, Pertamina President Director Ari Soemarno said Wednesday.

However, he didn't provide a timetable for the exploration or specific locations of the fields.

In April, Pertamina signed a preliminary agreement with SK Energy, South Korea's largest refiner by capacity, and Korea National Oil Corp. to cooperate in oil development projects.

The three companies are still conducting feasibility studies on oil field development, said SK Energy, which was formerly known as SK Corp.

SK Energy and Pertamina are already cooperating on a $200 million, 7,250-barrel-a-day lube base oil facility in Dumai, Indonesia, that will begin operations by the first half of next year. Lube base oil is a key raw material used to produce lubricant.

The two companies Wednesday launched a joint lubricant brand named ZIPEX, which they plan to export to Pakistan from September 2007, where SK Energy claims 20% of the high-quality base oil market.

SK plans to raise its lubricant exports, including ZIPEX, to 130,000 barrels by 2012 from 20,000 barrels currently and make inroads into other Asian markets, the refiner said in a statement.

Regarding a recent report that SK Energy will invest $150 million to revamp Pertamina's Dumai refinery to raise output to 200,000 barrels a day from 124,000 barrels a day, Soemarno said, "That is misunderstood. The figure is inaccurate and we have to study first."

He added that SK Energy has no plans to invest in the Dumai refinery at the moment.

Soemarno said Pertamina will raise its crude output to 180,000 barrels a day by 2008 from 160,000 barrels a day currently.

Indonesia's refining capacity will rise to 1.3 million barrels a day in five to six years, from about 1 million barrels a day currently, he forecast.

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