Pertamina must separate upstream and downstream operations

State-owned oil and gas company Pertamina should separate upstream and downstream operations to meet the new oil and gas law which bans an oil company to operate both upstream and downstream activities, Media Indonesia daily reported on Tuesday.

"Pertamina, under the new oil and gas law, should have established a subsidiary to handle all the company's downstream activities," said Tubagus Haryono, the head of BPH Migas, the government agency in charge of supervising the country's oil and gas downstream activities.

He said that Pertamina, which has an extensive pipeline network, can for example establish a special subsidiary to operate in oil and gas pipeline network, adding that the subsidiary can operate the pipelines for its own service or to rent them to other company.

BPH Migas will give exclusive rights to distribute or sell gas in certain areas to state owned gas distribution company Perusahaan Gas Negara (PGN) and PT Transgasindo, while the rights to build gas pipelines in certain areas would be given to PGN, PT Igas and PT Energasindo Heksa Karya.

Tubagus said that the agency would soon issue regulations to determine areas for the development of gas distribution pipelines and gas transmission pipelines as well as the pricing of gas for household customers. (*)