State oil firm PT Pertamina has embarked on an internal reform program under new leadership and has reaped billions of dollars in investments to double its oil and gas output.
Speaking to the media on Thursday (25/1/07), Pertamina president Ari H Soemarno said he had launched the internal transformation through 27 "breakthrough projects", including reducing the rampant leakage of fuels during transportation, increasing efficiency at the company's many ports and ridding its fuel depots of white-collar thugs and thieves.
Within their first three months, he said, these projects had brought in an additional $15 million.
The company has also worked to revamp its gas stations to better serve customers. Pertamina will also work with multinational oil and gas companies to enhance its downstream businesses; for example, it will partner with SK Corp to build a lubrication oil plant in Dumai, Riau and team up with Shell in the aviation fuel sector.
Soemarno said the company plans to more than triple its investment in the downstream sector to Rp3.7 trillion ($410 million) this year from Rp960 billion last year and Rp1.3 trillion in 2005.
He added that Pertamina would deepen its involvement in the upstream sector as well, which he said promised bigger returns. "The upstream is our value creator, while the downstream is our value enhancer. So we have to be strong in both," he said.
In the upstream sector, Soemarno said Pertamina would invest a hefty Rp10.1 trillion this year, a jump from Rp3.5 trillion last year and Rp3.9 trillion in 2005. Pertamina aims to double its oil and gas output from its current level of 235,000 barrels of oil equivalent per day within the next four years.
"So our total investment plan for this year would be about Rp14 trillion ($1.5 billion). That's still small, compared to our friends overseas. Petronas, for example, invests about $5 billion a year," Soemarno said.
He noted that most of the money for investment this year would be taken from retained earnings. Last year, Pertamina booked a profit of Rp21 trillion. About Rp12 trillion of that will be paid as shareholder dividends to the government, and the remainder retained.
This year, Pertamina, with total assets of about Rp360 trillion, aims to book a net profit of Rp23 trillion.