INTERVIEW: Pertamina unveils strategy to maintain domination in fuel market (Part II)
Tuesday, May 25 2010 - 04:43 AM WIB
Question: Is there any other major plan on fuel storage?
Answer: We?ll develop a pipeline network from Tuban to central part of East Java , from Surabaya to Pacitan, and to Blitar. The problem is not the distance, but the traffic jams. We have to solve it by developing a pipeline network. In the future we will reduce the number of trucks transporting BBM. We?ll rely on the pipeline across the East Java province.
Situation in Central Java is already good as there has been pipeline from Cilacap to Yogyakarta and to Boyolali. Later we?ll extend the pipeline from Boyolali to Semarang . So, many tanker trucks and ships will stop operations. That means Pertamina will be more efficient.
Why will the number of ships be reduced?
Because pipeline networks will replace them. We?ll no longer need tanker ships to go to Surabaya . The ships will only go to Tuban. But those are only big ones. From Tuban the BBM will be supplied through pipeline. Isn?t it efficient? So, the number of ships will be reduced.
How many kilometers will be the total length of the pipeline network?
From Surabaya to Tuban 120 kilometer. From Surabaya to Keraton 40 kilometer, but it still need some land clearings.
No plan to use the land owned by PT Kereta Api along its railway?
Land sites alongside the toll roads and railway tracks are a priority for us. But not all of them fit our plan. West Java is relatively secured. So is Bandung. Do we need to extend the pipeline from Bandung to Balongan? We still study such necessity. We think that we also need to consider such extension in case that we?ll face a supply problem from Cilacap to Bandung .
There has been a big storage in Balongan and Tuban. Then we only need to think of infrastructure in eastern Indonesia , that is Bau-bau storage.
How is the progress of Bau-bau development?
We?ve done almost 30 percent.
What is its capacity?
Big enough. Once its development is finished, we can solve our problem in Balikpapan, where our ships have to go through a long queue due to its crowded condition. Most of our tanker ships will take their BBM loads from Bau-bau. Makassar and other cities in the eastern Indonesia will be supplied from Bau-bau. Currently, too many ships have to queue in Balikpapan . We hope that the Bau-bau facility will be completed at the end of this year.
What about the western Indonesia ?
The western Indonesia is actually secured. But we?ll expand the capacity of Tanjung Uban and Tanjung Pinang storages. The Tanjung Uban storage functions specially to store Premium gasoline. We?ll increase its capacity by 200,000 kiloliter. So, when there is any problem with any of our refineries, we don?t need to depend on Singapore . It?s enough that we only rely on Tanjung Uban storage.
Currently, what is the capacity of Tanjung Uban?
It?s small. It?s only enough to accommodate the needs of Medan and surrounding areas. It cannot yet function as our buffer stock. On average, our Premium stock is enough for 17 days. We?ll increase this to 22 days.
Is the 22 days ideal for Pertamina?
Yes, that is very ideal. Particularly, if we consider that in the end Premium gasoline will no longer be produced. The government has planned to stop the production of Premium in 2014. Previously, they said it in 2004 and then delayed it to 2014 and it won?t be long from now. We?re making preparations for it.
Beside the Premium, what kind of BBM are there in Tanjung Uban?
Only Premium gasoline, because diesel oil supply is big enough.
When will its development start?
We plan to open its tender in 2011.
What about diesel oil stock? How many days can it accommodate?
On average, almost 27 days stock is safe. Kerosene is also safe because it is no longer subsidized. Although Pertamina has exported the kerosene, it is only our excess supply. It?s only incidental.
If you have excess supply of kerosene, can it be processed into other products?
No, it cannot. The best we can do is to process it to AVTUR. But AVTUR sale is limited. The demand for kerosene before its conversion program to LPG was 11 million kiloliters, while the AVTUR is only 2.4 million kiloliters. Part of it has been also converted to diesel oil. But such diesel oil has too much fractions of kerosene. It?s not good as it could damage machines. It is not a mixture of diesel oil with kerosene. This is different. There is a specification that should be followed.
So, we won?t import AVTUR any more?
No, we won?t. I think there will be none in the future. Now the AVTUR demand is 2.4 million kiloliters. In the future, it will increase up to 3 million at the most.
Isn?t our aviation industry flourishing?
It?s growing but not so significantly. Every day, the airlines get more efficient. Why does Garuda (State owned airlines PT Garuda Indonesia) turn to 737-900? Because it is more efficient.
What is its growth exactly?
It?s 3 percent at the most.
With regards AVTUR, is it true that there is no longer any scheme of cooperation?
Let me put it this way. Cooperation is based on trust. If there is no longer trust then the cooperation will be in trouble.
Who has no longer trust?
It can be us or our partners. If there is a business with a growth and a certain condition? when it is apparently no longer profitable, what?s the point of continuing it?
So, there is no more cooperation?
We have to cooperate with an organization. Those airlines have their own organizations. For foreign airlines, for example, they rely on World Fuel (Services). So we get to deal with World Fuel as an organization, not with airline companies like Cathay Pacific. If we can become a member of this organization then we can sell our AVTUR, and any airline company can buy the organization?s AVTUR.
So, none of the cooperation schemes with BP and Shell has been implemented?
Not yet for the time being. But there outside Indonesia our business go on. We?ve gone to Europe to sell AVTUR. We do joint venture with the others. We enter Amsterdam, Dubai. This is like a mutual cooperation. We enter their regions and they come to our regions.
The last question on AVTUR. How is the problem with Cathay?
We cannot respond yet as it is still handled by KNKT (The National Committee for Transportation Safety). We?ll leave it to KNKT to deal with. But we?ll always try to do our business professionally according to existing regulations. We understand that in serving the aviation we have to do it correctly otherwise all of the airlines would have been fallen off. (to be continued)