Pertamina issues $1.5b in global bonds

State oil and gas company PT Pertamina raised US$1.5 billion from the issuance of global bonds to international investors last week, according to the company’s finance chief.

Pertamina finance director M. Afdal Bahaudin said on Monday that the company received $1 billion in cash from the sales of 10-year notes on May 16 and another $500 million from the sales of 30-year notes on May 21.

The offerings were conducted in New York, the United States.

“Pertamina’s bonds have attracted many investors from Asia, Europe and the US,” he told reporters in Jakarta after a hearing held by the House of Representatives’ Commission VII overseeing energy.

The 10-year notes yielded 235.1 basis points more than similar-maturity treasuries and it is currently marketing as much as $500 million in notes to yield between 6.75 percent and 6.875 percent, according to Bloomberg data.

Afdal said that the demand for the $1-billion offering reached seven times the issued amount, while for the $500-million offering, the demand was 10 times the issued amount.

The company appointed Citigroup Global Markets, Credit Suisse Securities and HSBC Securities to sell the bonds.

Afdal declined to specify if the funds acquired from the bond sales would be used to purchase a stake in an oil and gas block in Angola that was currently owned by US-based ExxonMobil.

However, State-Owned Enterprises Minister Mustafa Abubakar said on Monday that the ministry had granted approval to the company to use funds from the $1.5-billion bond issue to finance a plan to acquire a stake in the Angolan block.

“The $1.5-billion global bond [issue] has been included in its 2011 business plan and the committee has agreed on it. If Pertamina wants to, [the proceeds] can all be used for Angola, Cepu, the West Madura offshore block, as well as to revitalize wells in an attempt to boost the nation’s oil output,” he said after a meeting at the Office of the Coordinating Economic Minister in Jakarta.

Pertamina reportedly bid $3.5 billion for ExxonMobil’s 25 percent stake in the Angolan block earlier in May, surpassing offers from the China Petrochemical Corporation, known as the Sinopec Group, and India’s Oil and Natural Gas Corporation.

As previously reported, Pertamina said it would set aside Rp 37.1 trillion (US$4.3 billion) for investment this year to realize its ambitious target of boosting oil production to a million barrels per day by 2015.

During the hearing, many commission members questioned Pertamina’s decision to acquire blocks abroad, saying that optimizing production of the company’s blocks in Indonesia and boosting exploration were more important for ramping up the country’s future oil and gas production.

Pertamina booked Rp 15.82 trillion in net profits in 2010, up 5 percent from Rp 15.07 trillion in 2009.

Pertamina failed to achieve government-set oil and gas production targets in the first quarter of 2011, producing 189,100 barrels of oil per day (bpd), 9.1 percent below the target of 208,100 bpd.

On natural gas, the company produced only 1,456 million standard cubic feet per day (mmscfd) in the first three months of this year, 4.1 percent below the target of 1,519 mmscfd.