Indonesia’s Pertamina has received approval from the Algerian oil and gas regulator to develop oil and gas wells in the north African country, a company director said Oct. 22, amid efforts to prop up declining domestic oil output.

The state energy company expects to begin drilling development wells in Algeria in 2016 and estimates peak output of up to 30,000 barrels per day (bbl/d) by the end of next year or early 2017 from around 18,000 bbl/d at present, Pertamina upstream director Syamsu Alam told reporters.

“This is important because reserves can be brought to Indonesia,” Alam said.

Next year Pertamina estimates its capital expenditure to climb to between $5 billion and $6 billion, up from a forecast spend of $4 billion this year. As of the third quarter, Pertamina's capital expenditure had reached $2.5 billion.

Low oil prices and fuel prices set by government have eaten into the company's profits, which are estimated to reach between $1 billion and $1.2 billion this year, below an April target of $1.7 billion, Pertamina Finance Director Arief Budiman said.

“The fact is fuel prices average at around 90 percent of our production costs,” Budiman said.