Interview: Pertamina Tongkang sets to expand business
Wednesday, September 23 2009 - 01:55 AM WIB
Cabotage principle will come into effect next year. What will PT Pertamina Tongkang (PTK) do in response to the policy? What is PTK?s plan for the future?
PTK now owns 17 vessels of various types, including 5 AHTS (Anchor Handling Tug Supply) vessels, two Straight Supply Vessels, three Multi Purpose Vessels, four Harbor Tug boats, one 1500 DWT tanker. Most of our business activities are carried out in offshore areas, serving drilling activities. Seventy percent of our business is carried out in offshore areas, 30 percent onshore.
For local shipowners, an implementation of cabotage principle is like a dream. But it remains to see if the dream will be a good one or not. What is clear is that the implementation of cabotage principle will create enormous business potentials.
We have to note however that a ship can?t be built in a short period of time. Indeed, the regulation that calls for the implementation of the cabotage principle has been in place since 2005. We should have prepared ourselves long time ago. But, we did not. Time is too short now (for us to make preparations), in view that our competitors have dominated around 80 percent of offshore supply market in Indonesia. That?s our estimation.
Once again, the cabotage principle creates a lot of potentials. It is providing a big cake for us. But, we are not quite ready yet, for instance from banking perspective.
But, Pertamina?s equity is big, isn?t?
Pertamina (PT Pertamina Persero, the parent company of PTK) is now concentrating on offshore business, not accessories (of oil and gas business). We are just an accessory.
Pertamina has started playing in offshore sector. It has started making acquisitions offshore. It will provide business potentials for PTK. As you know, it is not easy now to get long-term contracts for offshore activities. On the other hand, banks want long-term contracts.
Who are then the clients of PTK?
Many, including (French firm) Total. All are oil companies, but not our parent company. Pertamina has just now started a tender for the provision (of goods and services) to its offshore business, in which we shall participate. Thus, it has not been realized yet.
How much is PTK?s revenue per year?
Not much, around US$40 million, compared with the high costs payable for the purchase of a vessel.
How much does a AHTS vessel cost?
In 2006, we paid $7 million for one unit. Now the price has increased to $11-12 million per unit, a brand new one. The one from Taiwan even costs as much as $15 million per unit.
You just said 80 percent of (offshore) shipping service market is now controlled by foreigners. How much is the value of the market?
We only controlled 10 percent. Thus, the total value of the market is around $400 million a year.
Let me tell you something. It?s not easy now to get long-term contracts. We mostly handle short-term contracts, which last 100 days or one year at maximum. This is because production sharing contractors (PSC) will use vessels of new type, after completing a drilling program and making discovery.
What is the utilization rate of PTK now?
It?s high now. Our estimation is that it will reach 70-80 percent by the end of the year.
Is there a plan for expansion?
We are looking for funds. Once we get the funds, we?ll soon start building new AHTS vessels. We plan to have another three AHTS vessels with 6000 horsepower (HP). The total costs are estimated at $325-$40 million. There are banks, mostly foreign ones, which have approached us, offering loans. We expect to operate the new vessels in the middle of 2010. They may be built in Batam or by (state owned shipbuilder) PT PAL. The most important thing is the machine. The machine could be provided by Caterpillar, Mitsubishi, or others.
Aside from the three AHTS vessels, what else you want to buy?
We shall also buy one Harbor Tug boat. It costs around $3 million.
In connection with Pertamina?s plan to go public, is PTK part of the plan?
Yes, it is. To be fair, we are now looking inward, paying attention to the inside. This firm lacked attention in the past. And I have been working here for just one year.
So, you are now focusing on internal affairs?
That?s right. Now, our look is different. The most important thing is that we want to be recognized as qualified in this sector.
The cabotage principle only requires a 51 percent ownership by national firms. Don?t you have a plant to set up joint ventures with foreign firms?
The problem is that there are foreign firms who decline to change their flags. We have been approached by four firms from Malaysia. The problem is that they got financing form Singaporean banks. And there are people who don?t want the flags (of the vessels) be changed. They don?t mind if the used vessels are sold to us. Malaysia has implemented a cabotage principle, but they provided the financing by themselves. Aside from the Malaysian firms, we have also been approached by Malaysia?s syariah banks. As for Indonesian banks, they have usually run out of dollars, have only rupiah left. It is not easy (to do business) using rupiah.
Aside from AHTS and Tug Boat, what else you want to buy?
We have ordered a small tanker for Pertamina with a capacity of 1,500 HP. We placed the order with Koja Bahari. The construction of the tanker is near completion. It is expected to be delivered this September. The tanker will be used by Pertamina to serve small depots. The value is about $3 million. Pertamina will charter it for five years. We are paying with cash because it?s difficult to get bank loans at present.
Can?t you refinance other vessels?
That?s one of our strategies to get financing.
Let me tell you something. Generally, we are treated as a part of Pertamina. Banks usually have platform and segmentation. For instance, Pertamina has a certain platform. Thus, there are limits (of loan provision) for this segment.
Aren?t you interested to provide FSO (Floating Storage and Offloading unit)?
We are taking part in tenders to provide two FSOs. We hope we shall win. The first is the tender by Petronas and the second by ConocoPhilips. In these tenders, we are cooperating with Malaysian firm M3nergy. They are experienced. I have seen myself the vessels they are operating in Southeast China Sea. It is of the 85,000 type for gas storage. As far as crude is concerned, they send vessels once in several weeks to take the crude and transport it to Malaysia.
The tenders we are participating in are for the provision of floating gas carriers. One is for Pertronas?s operation in Bukit Tua, Madura; another one for ConocoPhilips? operation in Southeast China Sea. These are long-term contracts. Both are FSOs. I am not sure if the one for Bukit Tua is for the storage of gas or oil. As far as I know, there 43 firms participating in this tender. Meanwhile, the ConocoPhilips tender is for gas storage. The two FSOs will carry Indonesian flags.
With regards the cooperation between PTK and the Malaysian firm (M3nergy) I just mentioned, they (M3nergy) have experiences. By cooperating with them, we want to learn lessons.
There are several other projects. We are preparing (the development of) the Kabil Marine and Oil Logistic Base in Batam and a logistic base in Balipapan. For the project in Kabil, Batam, we are cooperating with Singaporean firm Toll in Sembawang and PT Keppri. Pertamina has 50-hectare lands there. We hope the facilities can start operation in 2010. The facilities will among others target Natuna. We are looking for funds (for the project). Meanwhile, in the Balikpapan project, we are cooperating with PT Pertamina UP V Balikpapan. The facility will belong to Pertamina UP V but will be managed and commercialized by PTK. The project will be developed on 20 hectares of land. Hopefully, after the Idul Fitri holiday, we can launch the project. The logistic base will serve production sharing contractors (PSC). We see big potentials there. And we have set up communications with PSCs there.
Could you tell more about the go-public plan?
We have been asked by Pertamina to go public first. Hopefully, the IPO can be carried out in 2012. If PTK is listed now, no investors will be interested. Thus, (there should be) a nonlisted phase first. If we are listing our shares now, some auditors will come and take a look at us. (They might comment ?How come a company like this want to go public??. Trust me. We are focusing internally in order make ourselves better.
How many workers does PTK have now?
Four hundred people offshore, around 200 onshore. Our branches are spread (across the country) from Arun in Aceh to Sorong in Papua.
Thus, for this year, you are seeking to get $40 million in funds for the construction of the AHTS. Is this the biggest capital expenditure thus far?
Yes
What?s PTK plan after 2010?
It has been specified in our long-term working plan. We have specify revenue target for each of the coming years.
Are there any other business potentials you are going to develop?
We have four vessels which serve as backups, that is Harbor Tug boats. The business is not bad. Besides, we also do agency works. Normally, we are directly appointed by principals. We particularly handle export-import vessels. This business is not bad either. The revenue is not big, but the profit is significant. This means we have to be diligent in looking for small businesses like these. (bernard)