Indonesia oil trade continues to be murky<\/p>\n
SINGAPORE (Reuters): The oil business in post-Suharto
\nIndonesia is just as murky, if not murkier, under the new
\ngovernment despite its promises of transparency, industry sources
\nsaid.<\/p>\n
Six months into the job, President B.J. Habibie's government
\nhas yet to come to grips with the problems created by decades of
\nmonopolistic control in the oil sector.<\/p>\n
They said while some inroads had been made in the larger deals
\nsuch as oil exploration, the bulk of the industry was still
\ndogged by the legacy of corruption, collusion and nepotism --
\nknown in Indonesia as KKN.<\/p>\n
\"Initially there were some signs changes were taking place but
\nafter that nothing much has changed. Now there is a danger that
\nthe old people are coming back,\" one regular supplier said.<\/p>\n
Industry sources said no concrete steps have so far been taken
\nto either liberalize the domestic market or make the country's
\nmulti-billion dollar oil trade transparent.<\/p>\n
Indonesia, Asia's sole member of the Organization of the
\nPetroleum Exporting Countries (OPEC), achieved net crude exports
\nof 220 million barrels and net oil product imports of 35 million
\nbarrels in 1997.<\/p>\n
Last year, crude and oil product exports earned the country
\n$6.8 billion, while $3.6 billion was paid out for imports.
\nIndonesia's current rate of oil production is around 1.30 million
\nbarrels-per-day (bpd).<\/p>\n
\"On oil exports and imports, we will make it transparent,\"
\nMines and Energy Minister Kuntoro Mangkusubroto said on May 25,
\nen route to the first meeting of the country's new cabinet.<\/p>\n
Action swiftly followed, as state monopoly Pertamina axed the
\nnear 20-year-old exclusive sale and purchase arrangement it had
\nwith two affiliates -- Perta Oil and Permindo -- co-owned by
\nfriends and family members of former President Suharto.<\/p>\n
But that was as far as it went. Instead of trading through the
\naffiliates, Pertamina is now buying and selling directly but the
\ndeals remain shrouded in secrecy.<\/p>\n
The first few deals were struck exclusively with international
\noil companies and later expanded to include a select group of
\nsmaller companies, but always through private negotiations.<\/p>\n
The promise of an open tender system was not fulfilled.<\/p>\n
Recently, eyebrows were raised and murmurs of KKN resurfaced
\namid the trading community when an hitherto unknown in the
\nIndonesian business, Singapore Petroleum Co (SPC), began chalking
\nup impressive sales to Pertamina.<\/p>\n
Traders said SPC, a small Singapore-based firm with a 100,000-
\nbpd direct equity refining capacity, was backed by a company
\nrelated to the Indonesian conglomerate Bakrie Brothers.<\/p>\n
They said the company, Petrocom, was set up in Singapore by
\nNirwan Bakrie, one of the major shareholders of the now-shunned
\nPermindo, seeking to re-enter the lucrative Indonesian oil
\nbusiness.<\/p>\n
Officials at SPC declined to comment on their recent sales to
\nIndonesia and Petrocom officials were not available.<\/p>\n
\"This is what happens when you don't have an open tender
\nsystem. There is always the danger of this, of some personality
\nor companies clicking and they do the business all the time,\"
\nanother trader said.<\/p>\n
\"There is a concern, a feeling in the market that this guy has
\nthe last look. They have a privilege which should have been long
\ngone,\" another said.<\/p>",
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