Indonesian and Malaysian state oil groups ally beyond region

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JAKARTA – Indonesian state-owned oil and gas group Pertamina will step up cooperation with Malaysian counterpart Petroliam Nasional, or Petronas, under an agreement signed on Tuesday that ranges from exploration to renewable energy.

The comprehensive deal comes as demand for oil and gas is expected to remain high in Southeast Asia.

The two sides “will explore possibilities for upstream to downstream cooperation,” said Pertamina, including research and development, oil and gas exploration studies – especially in technology to develop blocks to high carbon dioxide content – as well as renewable energies.

The scope of cooperation will go beyond their respective home countries, such as refining oil in East Asia and jointly exploring business opportunities on other continents. The two companies will also begin trading crude oil developed in their respective countries, a move that could lower procurement costs.

The deal comes a month after private Indonesian oil and gas company Medco Energi Internasional announced a deal to buy its UK counterpart Ophir Energy for 390 million pounds ($ 510 million), positioning itself to take on the leader. Pertamina by increasing its production in Southeast Asia.

Indonesia’s latest energy policy provides that oil represents 20% of the country’s energy mix, while gas contributes 24%.

When Petronas was founded in 1974, it was inspired by Pertamina, formed six years earlier. But Petronas has since overtaken its teacher, becoming one of Malaysia’s most profitable companies and contributing billions of dollars to government coffers each year.

The Malaysian company ranked 191st on the Forbes Global 500 list of companies, with revenue of $ 52 billion in 2017, while Pertamina generated $ 42 billion, ranking 253rd.

Pertamina’s finances were likely hit in 2018, as the government tried to keep subsidized gasoline prices low ahead of Indonesia’s upcoming presidential and general elections in April. The crown corporation has borne the additional cost of rising oil prices.

The deal comes a month after leading Indonesian oil and gas company Medco Energi Internasional announced a deal to buy UK counterpart Ophir Energy for 390 million pounds ($ 510 million), positioning itself to take on leader Pertamina by increasing its production in Southeast Asia.


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