Pertamina expected to ensure Mideast deals are realized
Monday, May 8 2006 - 12:56 AM WIB
This is because the preliminary cooperation agreements in the energy sector sealed during the visit - which Yudhoyono claimed could result in up to US$8 billion in fresh investment - requires the involvement of Pertamina one way of another.
For a start, Pertamina has been hand-picked to cooperate with two companies Saudi Aramco and Kuwait Petroleum Corporation (KPC) - to develop two different oil-processing plants, one in the East Java town of Tuban and the other in eastern Indonesia.
Each refinery would likely to have a production capacity of over 200,000 barrels of oil per day (bpd).
Aside from the development of the refinery, Aramco and KPC also would secure the crude oil supply, with Indonesia also seeking trade financing from the Islamic Development Bank (1DB) to cover the down payment of the supply.
Indonesia, through Pertamina, currently has to make payment on oil imports, both crude and refined, one month in advance - a scheme which often causes financial headaches for cash-strapped Pertamina. Periodic cases of fuel scarcity in different areas have been blamed on the firm?s inability to cover the payment.
Details of the cooperation with the IDB will be discussed in the coming months, but it?s understood the agency would cover the down payment of the oil imports, which Indonesia would return in installments, likely over about six months.
With domestic oil production declining each year last year it was slightly above 1 million bpd, lower than the OPEC output quota of 1.3 million bpd - Indonesia imports 300,000 to 400,000 bpd of crude oil annually.
?This (financing) facility has been applied by other countries, so why not us? This will help the sustainability of the imports and eventually ensure supply of fuel for domestic consumption,? Energy and Mineral Resources Minister Purnomo Yusgiantoro, who accompanied the President during the 10-day trip, said in Amman. Yudhoyono visited Saudi Arabia, Kuwait, United Arab Emirates, Qatar and Jordan.
Another deal requiring Pertamina ?s involvement, based on an MOU signed with an investment company in Doha, is for the upgrading of capacity and quality of the existing oil-processing plants, whose production capacity has declined due to aging facilities.
?This (agreement) will help us modernize our existing large refineries. We know that most refineries in Dumai, Cilacap and Kalimantan are old. They need to be renovated to boost production and operate more efficiently,? said Pertamina president Ari Sumarno.
With the massive projects in the pipeline, it will be up to the often criticized Pertamina to show the government that it is ready to deliver on the requirements.
Ari who assumed Pertamina?s leadership in March, said the company was prepared, and that the projects were in line with its overall business plan.
?All these are for the benefit of Pertamina and the country as a whole,? he said. ?If we really want Pertamina to be a world-class player in the energy sector, then we have to have world-class facilities as well.?. (*)