Pertamina: There is no pressure for Pertamina to accept trade off with TPPI

State oil and gas company Pertamina has stated that it did not receive any pressure to accept a deal in the restructuring of stalled power plant in Tuban, East Java, belonging to PT Trans Pacific Petrochemical Indotama (TPPI), Bisnis Indonesia daily reported on Tuesday.

Pertamina president Baihaki Hakim said since the beginning Pertamina had been eyeing TPPI project, and therefore, when it is offered to participate in its restructuring, it welcomed the offer.

"We see TPPI as a well-managed petrochemical complex, it's even better than the one belonging to PT Chandra Asri. Therefore, we continue negotiations to participate in the project," he said in Cisarua, Bogor, on Monday.

He even said that through TPPI, Pertamina would develop its petrochemical business. He also planned to build a refinery plant next to the TPPI project and also an olefin center.

"TPPI has been established, and we will use it to develop our petrochemical business... We plan to build a fuel refinery plant next to TPPI and also an olefin center," Baihaki said.

He said many other oil and gas companies have expanded their businesses into petrochemical industries, such as Beyond Petroleum, Singapore state oil company and a number of Middle Eastern oil companies.

Commenting on criticism and Pertamina would be victimized if it goes ahead with TPPI project, Baihaki said that the scheme involving Pertamina to salvage TPPI project was a result of negotiations.

"There is no pressure, it is a business negotiation," he said.

The government has given its supports over Pertamina's planned involvement in the restructuring of the TPPI stalled project.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that Pertamina's involvement in the project must be based on business-to-business consideration.

Pertamina has likely to participate in the project through the so-called monetizing the Pertamina product offtake and condensate/propylene supply agreement, as proposed by the Indonesian Bank Restructuring Agency that has taken over most of TPPI debt.

With the proposed scheme, Pertamina would supply propylene/condensate as the feedstocks to TPPI for a four-year period worth US$400 million that would be converted into Pertamina's ownership of 10 at TPPI. (*)