Indonesia
After threatening to disband Petral, SOEs Minister Dahlan Iskan has formed a special team and opened an 'Indonesia Incorporated' office in Baghdad. His next target is Libya.
The order at the end of May was clear. President Susilo Bambang Yudhoyono requested that state oil and gas firm Pertamina no longer remain dependent on third parties for its purchases of crude oil and products. "Prioritize purchases directly from the main sources," he said in the speech on a Tuesday night at the State Palace.
The President's instructions gave impetus to previous strong statements of State-Owned Enterprises (SOEs) Minister Dahlan Iskan. On several occasions, Dahlan had voiced his displeasure at seeing the way Pertamina imports oil for domestic needs that continue to skyrocket.
With average daily requirements of more than 1.2 million, increased domestic production is at most only around the 860,000 barrel mark per day. The remainder has to be imported. "Pertamina is a big company so why are they buying oil from traders?" Dahlan admits he has tried, and failed, to understand.
Such behavior has also caused Dahlan to threaten to close Pertamina Energi Trading, or Petral, which is an extension of the state-owned company that buys oil on the market. These kinds of purchase schemes have been repeatedly viewed as problematic by many parties because they are suspected of being rife with price games and becoming the objects of interest seeking for the officials in charge.
According to Dahlan's account, the President has repeatedly invited him and several other ministers to discussions concerning Petral. "President SBY's directive was clear and firm for me: fix Pertamina," said Dahlan, as quoted on the official website of the SOEs Ministry. "If there are those who claim they've got the backing of the President, or from Cikeas, or from the palace, ignore them."
Armed with those orders, Dahlan formed a special team to reactivate the search for oil at its sources, especially in regions which as yet are not being used to their maximum potential. In the East, Kazakhstan is in the radar. In the Middle East there is still Iraq, which is only just recovering from its turmoil and opening big opportunities. In North Africa, there is Libya, which also has a huge potential.
An official high up in Pertamina said that the idea of purchasing oil directly from its sources was actually not new. He himself acknowledged that he had once been given the task of exploring opportunities in the three countries which are now a target. "But this isn't an easy problem. You're risking your life," he said, looking to his left and right to make sure that there was no one else he knew in the room.
He then told of the threats which he frequently received while he was carrying out his assignments in Libya and Kazakhstan. "Importing this oil is already like mafia business. The money flows everywhere."
Unsurprisingly, this time around, the team which has been formed involves more elements. Lead by senior Pertamina official, Bayu Kristanto, the new team has not just been assigned to search out every possibility to get oil direct from its sources. They have also been ordered to look for other trading opportunities, including taking other SOEs officers in the field of construction such as Wijaya Karya, Adhi Karya, and Hutama Karya. "This is a step to develop the real 'Indonesia Incorporated'," said Bayu in his office.
For starters, the new office started operations in the capital of Iraq, Baghdad, on June 11. Consisting of between six to 10 personnel, their primary task is to pinpoint and map out the chief problems in this country which is still frequently rocked by explosions on the streets. "We have to study all aspects whether directly connected to businesses or not: regulations, culture, society, legal matters, and so on," Bayu explained.
In Iraq, Pertamina does not have to start from scratch. They still own assets there which were temporarily frozen due to the political chaos and war an exploration field and a production field. Their potential is around 30,000 barrels per day. "With this new concept, our target is not only getting a direct supply of crude oil but also working up the line. It is there that SOEs construction will get a portion," remarked Bayu.
A similar concept will be applied in Libya and other countries. In the country which was ruled for 42 years by Muammar Gaddafi, several private Indonesian companies such as PT Medco Energi, PT Citra Megah Karya Gemilang, and PT Inti Karya Persada Teknik have already undertaken projects worth hundreds of millions of dollars. Pertamina also still has in its pocket concessions in two exploration fields, on land and off the coast.
Another project which until now has been idle in Libya is a long-term contract to get supplies of as much as 6 million barrels of crude oil per month or 200 barrels per day. This contract has been in effect since February 2008, when Gaddafi still ruled, a result of direct lobbying to Shukri Mohammed Ghanem, who at that time headed Libya's national oil company.
"We will honor all existing international contracts," the charge d'affaires of the Libyan Embassy in Jakarta, Masoud S. El Koshly, guaranteed. "If the Indonesian government wants to, it's all still ready to be undertaken."
Indeed, Koshly had questions of his own. He asked why Indonesia was so slow in re-entering Libya, at a time when other countries are racing to get to opportunities there. "If it's realized, the value of that contract for crude oil would be huge. It could reach US$5 billion a year. The trading opportunities we can create are just as big. It's not just ceramics and construction services. If you bring drinking water we'll buy that there too."
By Y. Tomi Aryanto
Tempo
No. 44/12, June 26, 2012
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