Antam sales decline on lower output, prices

In a statement sent over the weekend, the company said full-year unaudited sales reached Rp 9.5 trillion (US$880 million) in 2008, down from the Rp 11.8 trillion booked in 2007. 

Lower output amid falling demand and prices were the main reasons for the decline in sales, the statement said. 

In 2008, Antam produced 17,566 tons of ferronickel, 5 percent less than its 2007 output. It sold 17,026 tons of the alloy, which represented a 3 percent decline from 2007. 

The situation was then exacerbated by the lower price, with the average realized ferronickel price in 2008 down around 37 percent from a year earlier. 

The lower price and weakening demand had been seen since the last quarter of last year, with sales in the fourth quarter of 2008 declining 38 percent. During the period of October, November and December, unaudited sales fell to Rp 2.11 trillion from Rp 3.38 trillion in 2007. 

Reflecting a predicted continued slump in demand, Antam said it expected ferronickel production to only reach 12,000 tons in 2009. 

In addition to ferronickel, the company also produces gold and bauxite, which both experienced an increase in sales, partly compensating for the slump in ferronickel. 

In 2008, gold production reached 2,833 kilograms, contributing around Rp 2.7 trillion in sales, or about a quarter of Antam's total sales. The domestic market accounted for 71 percent of Antam's revenue from gold. 

Due to its significant contribution, Antam is intensifying its efforts to boost gold output amid a slump in global ferronickel prices. 

It said it was trying to gain control of the huge Martabe gold mine in North Sumatra from Australia-based Oxiana Limited. 

For 2009, the company has allocated Rp 3.04 trillion for capital expenditure, a huge increase from last year's Rp 758 billion.

Source: The Jakarta Post , Jakarta | Mon, 02/02/2009 4:05 PM | Business 

Government plans to provide incentives for coal bed methane project developm

The government is mulling incentives for companies that develop Coal Bed Methane (CBM) projects in the country, in an attempt to attract more investment in the sector. 

The energy ministry's oil and gas director general, Evita H. Legowo, told The Jakarta Post recently that the incentive scheme for CBM developers would adopt the tax facility system granted to oil and gas contractors in Indonesia. 

"*The incentive is needed because* we want to attract more investment in the *CBM* sector," Evita said. 

Under existing Finance Ministry regulations, every oil and gas activity in the country is exempt from import duties for exploration equipment, and also exempt from value-added tax. 

Even though CBM is closely related to oil and gas exploration activities, the government has yet to include the alternative natural gas in the category that enjoys the tax and duties exemptions. The regulation only allows the incentives for the development of oil, gas and geothermal energy. 

CBM is a method of extracting methane from coal seams. Once the methane has been separated, it can serve as an alternative to natural gas. 

The government first unveiled CBM projects in the country in 2007, offering them up to investors. 

The government provides a relatively better production split for CBM projects than oil and gas projects, increasing CBM operators' profit sharing to 45 percent - much higher than the 15 percent and 30 percent that oil operators and gas operators get, respectively. 

Compared to the development of oil and gas, CBM projects require a lot more investment and time, with the exploration phase involving a process of discharging water from underground, which can take years before the gas can be extracted. 

The government has awarded four CBM development contracts in Kalimantan to a group of mining companies, requiring a total investment of at least US$20 million over the next three years. 

The four companies are a consortium of PT Pertamina Hulu Energi Metana Kalimantan A-Sangatta West CBM Inc; a consortium of Kutai West CBM Inc-Newton Energy Capital Limited; PT Indobarambai Gas Methan, and PT Barito Basin Gas. 

Recently, Vico Indonesia, jointly owned by UK oil behemoth BP Plc and Italy's Eni SpA, announced plans to develop a CBM project in the Sanga Sanga concession in Kalimantan, with a total investment of $600 million. 

Vico, which already owns a gas concession in the area, will speed up drilling for the CBM projects by 2012 and deliver gas from the coal seams by at least 2020. 

Gas production from CBM is expected to help the government reverse a declining trend in gas output. Indonesia has the world's second largest CBM reserves after China, with total potential reserves of 453 trillion cubic feet. 

The government has predicted a decline in gas production to 7.3 billion cubic feet per day this year, lower than the 7.9 billion cubic feet per day recorded in 2008, due mainly to aging fields. 

Under its blueprint for the development of CBM, the government is targeting production of 1 billion standard cubic feet per day, or about 0.18 million barrels of oil equivalent, by 2025.

source: Ika Krismantari and Alfian , The Jakarta Post , Jakarta | Mon, 02/02/2009 4:05 PM | Business