Oil & Gas

Indonesia targets IPOs at two Pertamina units next year, says deputy minister

Indonesia plans to launch initial public offerings (IPOs) for the upstream and geothermal units of state-backed energy company Pertamina next year to fund expansion, a senior government official told parliament on Wednesday.

Pertamina Hulu Energi, the upstream unit of Pertamina, is expected to sell a 10% to 15% stake in an IPO next year and had carried out initial “sounding out” of potential investors, deputy state-owned enterprise minister Pahala Mansury told lawmakers, reported Reuters.

The government also plans to conclude the IPO of Pertamina’s geothermal unit in the first quarter of next year after it was delayed due to “less than optimum” market condition this year, Pahala said.

The IPO of Pertamina Geothermal Energy was initially planned to take place the second quarter of this year.

Pertamina Hulu Energi could raise between $1 billion to $3 billion in the IPO, Refinitive publication IFR said, citing people with knowledge of the matter, according to Reuters.

IFR had also previously reported that the geothermal unit’s IPO could raise up to $500 million.

“The initial public offering of Pertamina Geothermal Energy, which uses seismic heat to generate electricity in the volcano-studded archipelago, could value the company at up to $2 billion depending on market conditions, people familiar with the matter said,” reported the FT in October.

Pahala did not disclose the expected value at the hearing.

This will be the first time one of the subsidiaries of Pertamina will go public.

Pahala said in coming years the upstream unit is projected to spend $4 billion to $6 billion a year amid a push by the government to enhance energy security and Pertamina Hulu could not only rely on its parent company.

“We hope to diversify financing… and to optimise the momentum of high oil and gas prices,” Pahala said, adding that the government would also push Pertamina Hulu to expand the development of offshore projects.

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