Pertamina expands to overseas market to survive

Pertamina needs to transform itself into a really professional company, that will be able to compete not only in the domestic market but also in the international market following the planned scrapping of its monopoly in the domestic oil and gas industries as mandated by the new oil and gas bill, currently being deliberated in the House of Representatives.

The company's plan to expand its operation into foreign oil and gas industries, especially in Vietnam, Myanmar, Iraq and Libya and its plan to open a trading office in Dubai should be lauded as an early step to transform the company into an efficient global oil and gas company.

However, judging from what Pertamina has been doing, it is a bit worrying if Pertamina really has the capacity, the capital and technology to expand into overseas market.

Pertamina just recently said that it had no money and technology and therefore, it did not join the tendering of a number of deep-water oil and gas blocks in Makassar Straits.

But on Tuesday, Pertamina's president Baihaki Hakim said that Pertamina had no funding problem to finance its overseas expansion drive. Baihaki said that for the first stage, it would cost Pertamina only US$10 million to conduct seismic and geological surveys in those five countries.

Again, it is subject to question, as the cost would easily soar much, much higher when Pertamina enters into exploration and, moreover, exploitation activities of those overseas oil and gas investment projects.

Nevertheless, it is better late than never. Pertamina's plan to expand its operation into overseas market is laudable and worth supports.

It is also good for Pertamina to learn from the experience of Malaysian state oil and gas company Petronas, that in the beginning learned from Pertamina on how to manage its oil and gas reserves but now had become one of the world's most respected global oil and gas companies.

Petronas, that started its international drive in early 1990, has now expanded its oil and gas businesses into no less than 25 countries.

Although its overseas operations contribute only one-third of its income, Petronas's overseas operations do increase its oil and gas reserves into 17.15 billion barrels of oil and gas, enough for 16 years of exploration (for oil) and 32 years (for gas). This is much better than the reserves Pertamina (Indonesia) has, that is enough for about ten years of operation.

Petronas booked a net profit of RM16.49 or equivalent with Rp 49.2 trillion last year, the highest in its history, compared with only Rp 4.9 trillion booked by Pertamina last year.

It will also be good if Pertamina could forge closer cooperation with Petronas and other major oil and gas companies in the region, such as Authority Petroleum of Thailand (PTT) to improve their standing in international market, following mega-mergers among world oil and gas companies.

One more important thing is that Pertamina should need to free itself from any intervention from outside power, be they from the executive power or the government or the legislative power or those in the House of Representatives or the judicial power.

Pertamina should not anymore act as a cash cow to any party in this country. It should becomes an efficient and professional company, that would eventually benefit the country and its people. (*)