Govt to review Pertamina trade, shipping contract

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto said yesterday the government would review all contracts between state oil and gas company Pertamina and trading and shipping companies, including those owned by former president Soeharto's family.

"All the contracts will be reviewed and the results of the evaluation will be announced transparently," Kuntoro said after the cabinet's first meeting at the palace.

He said that beginning next month the government would introduce open bidding for new contracts for the import, export and transport of Pertamina's fuel and crude oil.

"No special treatment will be given to any parties," he said.

Indonesia produces 1.5 million barrels of crude oil and condensate per day, about 50 percent of which is exported mainly to Japan.

Pertamina exports its crude oil to Japan through Pacific Petroleum & Trading Co., equally owned by Pertamina and a Japanese firm.

"The Japanese market is very difficult to penetrate unless we cooperate with Japanese companies," Pertamina president Soegianto once explained.

Indonesia, though a net oil-exporting country, imports between 15 percent and 20 percent of the 52 million kiloliters of fuel it consumes annually due to the limited capacity of Pertamina's refineries.

Pertamina also imports 70 million barrels of crude oil annually, mainly from the Middle East, to feed its refineries.

The state oil and gas company buys imported fuel and crude oil from Perta Oil Marketing Ltd. and Permindo Trading Oil Co. Ltd., both of which have had the exclusive rights to import the commodities for decades under government decree.

Pertamina has a 30 percent stake in Penta and a 35 percent stake in Permindo, but the company refuses to publicly reveal the names of the other shareholders.

Sources say the remaining 70 percent stake in Penta is owned by a consortium that includes the Humpuss Group controlled by former president Soeharto's son Hutomo Mandala Putra -- also known as Tommy -- and Soeharto-linked foundations.

The remaining 65 percent stake in Permindo is owned by Mindo Petroleum, a consortium partly owned by Soeharto's son Bambang Trihatmodjo, Soeharto's cousin Sudwikatmono, Nirwan Bakrie and Roosano Barack.

Kuntoro estimated that these companies receive a commission of up to 35 U.S. cents per barrel.

Pertamina processing director Samto Utomo recently said the company would establish a new trading division to handle crude oil and fuel imports in competition with both companies.

Oil traders throughout Asia applauded the government's move, saying it would provide greater transparency into trading activities.

"This is certainly welcome news," said a trader with a Chinese-affiliated oil-trading company in Singapore.

"It will open the market to more than just a few people who have been regularly supplying to Indonesia," a trader in Singapore told Dow Jones yesterday.

Japanese trading houses and refineries said they were not too concerned about the government's move.

"We assume our minor but direct purchase contracts with Pertamina won't likely be affected by the review," said an oil trader with a leading Japanese refinery. "Also, given that we're facing a dwindling demand for Indonesian grades, we aren't too concerned," he added.

Analysts say the review might also affect Pertamina's contracts with publicly listed PT Humpuss Intermoda Transportasi, controlled by Tommy.

The company said in its 1997 annual report that Pertamina chartered nine of its tankers to transport crude oil and another three tankers to carry liquefied natural gas (LNG) to export markets. The charter period of the tankers range from ten to 12 years.

The company claims that its tankers make up less than 20 percent of the total armada being chartered by Pertamina. (jsk)