FOCUS: Pertamina to replace 56 vessels due to cabotage regulations
Wednesday, June 10 2009 - 03:05 AM WIB
State owned oil and gas company PT Pertamina now uses 56 foreign-flagged vessels to transport its oil and gas across the country. And under the cabotage regulations, the firm can only use the vessels until Dec. 31 this year and must use Indonesian-flagged ones thereafter.
The cabotage policy was laid out in the Presidential Decree No. 5/2005 regarding the Empowerment of National Shipping Industry, which has been reconfirmed by Shipping Law No. 17/2008
It is indeed not easy to replace an armada of such size. With a tanker aged 10 now costing about US$40 million, a total $2.24 billion of funds are needed to replace the armada.
That is the reason Pertamina has pledged to award long-term contracts to vessel owners. Currently, Pertamina leases vessels under a short, three-month contract. In the future, the firm will offer contracts with a longer period of up to five years, a measure that is expected to make it easier for local shipowners to get financing from the banking industry.
Johnson W Sutjipto, the Chairman of the Indonesian National Shipowners? Association (INSA), said in order to prevent a shortage of tanker fleets following the implementation of the cabotage regulations, Pertamina needed to soon replace its leased 54 foreign-flagged vessels.
?The state owned firm needs to sign long-term transportation contracts with national shipowners,? he told Petromindo.com in an interview on Friday (June 5, 2009)
Meanwhile, Pertamina?s President Director Karen Agustiawan said the firm would ask the owners of foreign-flagged vessels it is leasing now to use Indonesian flags in their vessels instead.
She said the firm would lease the Indonesian-flagged vessels for a longer period commensurate with the age of the vessels. ?We shall give a guaranteed contractual period that will provide certainties for the vessel owners to get economic benefits,? she said.
Johnson noted however that the owners of foreign-flagged vessels that got financing from foreign banks can not easily replace the flags with Indonesian ones.
?It is only possible if local banks take over the financing of the vessels,? Johnson said.
Potential new revenue the national shipping industry can reap following the implementation of the cabotage regulation is huge, indeed. Revenue from the oil and gas upstream sector alone is estimated at $1.5 billion in 2011.
Currently, only 25 percent of the sector?s products are carried by national-flagged vessels. The remaining 75 percent worth US$1.12 billion is transported by foreign-flagged vessels.
?A total of $1.12 billion in transportation revenue will flow out of the country each year barring the cabotage regulations. This is big potential revenue for Indonesian-owned vessels,? Johnson said.
Cabotage is the transport of goods or passengers between two points in the same country. Under cabotage shipping policy, trade between any two ports in the country can only be served by vessels owned by the country. (Simon Panggabean)
Pertamina?s tanker fleet
| No | Type of vessel | Vessel number | Owned by Pertamina | Leased |
| 01 | Tanker | 155 units | 36 units | 119 units consisting of 56 foreign-flagged and 63 Indonesian-flagged |
| 02 | Barge and tug boat | 16 units | 16 units | - |
| Source: Various sources | ? | ? | ? | |