Minister denies Sonangol-Pertamina crude import deal has been aborted

By Godang Sitompul

Minister of Energy and Mineral Resources Sudirman Said dismissed on Tuesday rumors that the crude oil import agreement between state owned oil and gas firm PT Pertamina and Angolan firm Sonangol has been terminated.

Pertamina and Sonangol signed an agreement in late October of last year to coooperate in downstream sector. Part of the agreement was Pertamina and Sonangol will set up a joint venture to develop refinery business in Indonesia and the JV will import crude oil from Angola to Indonesia.

?Pertamina and Sonangol is pursuing on the process of establishing the joint venture,? Sudirman told Petromindo.com.

Industrial sources said the country?s top leaders have asked the agreement to be aborted.

Since the signing of the agreement, the government heaped criticisms from various parties, including transparency activists. Pertamina has yet to officially unveil the full content of the agreement, but activists said Sonangol initially promised to give Pertamina a US$15 per barrel discount for its crude. Later, however, Sonangol insisted on selling its crude at market price.

When the agreement was signed in last October, crude price hovered above $80 per barrel on the international market. The price has dropped to slightly above $50 per barrel now, representing a drop of about 35 percent.

Furthermore, Pertamina has recently set up a new system for the importation of crude and oil fuels. The imports of crude oil and oil fuels will be carried through open and transparent tenders by Pertamina?s Integrated Supply Chain (ISC). Any parties willing to supply crude to Pertamina, including the Pertamina-Sonangol JV, should participate in the tender. This means the crude oil import agreement between Pertamina and Sonangol has become meaningless.

Editing by Johannes Simbolon