It also plans to boost refinery capacity to 1.5 million bpd, from 1 million bpd this year, president director Karen Agustiawan said at the Reuters Global Energy Summit in Jakarta.
The sharp increase in oil production and refinery capacity, if achieved, would pave the way for Indonesia to cut the import of oil products and make substantial savings on its energy subsidy bill, which amounts to billions of dollars a year.
"Our main focus is on upstream, probably most of our investment will go to upstream," Agustiawan said.
Pertamina has increased its planned investment in the upstream part of the business to 29.4 trillion rupiah ($3.18 billion) in 2010, from a previous estimated 26 trillion rupiah, rising to 34 trillion rupiah in 2011, but those figures do not include spending on acquisitions, she said.
Agustiawan said Pertamina would use internal funds, bank loans and a bond issue to finance acquisitions and investments, and that the amount it would spend on acquisitions was "unlimited" in order to achieve its output target.
"If we have to find the financing we will find it," said Agustiawan, who hopes that Pertamina might eventually be listed during her time as president director.
Pertamina has previously said it planned to raise $1.5 billion from a bond this year to finance its upstream activities.
Several upstream projects, mostly producing natural gas, are being developed, including projects in Sumatra and Java.
Agustiawan said Pertamina will boost its refinery capacity to around 1.5 million bpd by 2015 from about 1 million currently, which will mean it can stop oil product imports.
Pertamina has previously said it planned to boost capacity at its refineries in Balikpapan, Dumai and Balongan and also build new refineries in Banten and East Java. No construction has started yet.
Pertamina will add 200,000 bpd capacity to the 125,000 bpd Balongan refinery in West Java, she said.
However, Agustiawan said its Iranian and Malaysian co-investors want a 10-year tax break to build a refinery in Banten, West Java, adding that discussions over possible tax breaks have held up the project.
"If that issue is cleared, then I think there is no hurdle any more for Pertamina to go ahead with the project."
"I think it should be tax free. This is the project to secure energy security," Agustiawan said, adding that it was a matter of importance for the nation as a whole, not just Pertamina.
LACK OF INVESTMENT
Agustiawan said talks with Saudi Aramco are in the final stages over the import of about 200,000 bpd of Arab Light crude for Pertamina's Balongan refinery expansion.
Indonesia has nine refineries with a combined capacity of around 1 million bpd, but those only supply 70 percent of domestic needs with the rest coming from imports.
Indonesia's oil production has declined on a combination of ageing wells and lack of investment in developing new projects. Foreign investors have grown increasingly wary about committing to long-term projects because of a rising tide of nationalism and policy flip-flops.
Progress with two particular projects is being closely watched - Donggi-Senoro and Natuna - as investors are concerned about their commercial viability depending on whether the gas produced is exported, or sold to the domestic market at a much lower price.
More recently, Indonesia has indicated that gas sold to the domestic market may have to be sold at a higher price.
Agustiawan said that in both cases, the gas should be sold to both the domestic and the export market, and that it may be possible to raise the domestic gas price to an economic level as soon as next year.
In the case of Donggi-Senoro liquefied natural gas (LNG) project, Pertamina wanted to export 70 percent of the gas production and sell 30 percent to the domestic market, she said.
"All the investors outside Indonesia are looking at how the government is reacting toward this (Donggi-Senoro) project," she said.
Indonesia expects to resolve the terms, conditions and partners for the giant Natuna natural gas project by September.
The Natuna D-Alpha block has about 222 trillion cubic feet (tcf), of which 46 tcf is thought to be commercially recoverable. The project will require about $40 billion for development.
In 2008, Pertamina named eight potential partners: Malaysia's Petronas, ExxonMobil, Chevron and France's Total, Royal Dutch Shell, Norway's Statoil, Italy's Eni and China National Petroleum.
"They are still negotiating on the final terms, once it has done we hope to sign the PSC (production sharing contract)... we hope to get this done this year."
