Oil and gas giant Pertamina will be split into three companies

State owned oil and gas company Pertamina will be divided into three companies that will respectively operate in oil and gas upstream activities, gas and oil downstream industries and non-oil activities, Koran Tempo reported on Monday.

Pertamina?s president director Baihaki Hakim said in Jakarta on the weekend that with the massive restructuring plan, Pertamina would only act as a parent company with the main task of coordinating the operations of three subsidiaries.

"With the new structure, we hope that Pertamina will be able to operate more professional," he said, adding that the change will enable to increase total assets to US$37 billion within the next few years from about US$15 billion at present.

The new oil and gas law will gradually remove Pertamina?s exclusive rights in the exploration and production of the country?s oil and gas. As the consequence, Pertamina which at present still acts as the government?s arm in the development of the oil and gas sector, will operate as an ordinary company when the law is fully implemented.

Baihaki said that a subsidiary which will operate in oil and gas downstream activities will have more concession rights with the inclusion of several new areas in South Sumatra, East Java such as Cepu and the Matindok-Donggi block, Sulawesi.

According to him, the second subsidiary would operate oil refinery and gas liquefaction plants. Besides its own refinery plants Balongan, Kasim and Pangkalan Brandan, the subsidiary will also operate the government-built refineries such as Cilacap, Balikpapan, Musi and Dumai refinery plants.

Baihaki said that the third subsidiaries would operate the non-core business activities which include regular airline operator Pelita and some hotels. (*)