Indonesia oil trade continues to be murky
Indonesia oil trade continues to be murky
SINGAPORE (Reuters): The oil business in post-Suharto Indonesia is just as murky, if not murkier, under the new government despite its promises of transparency, industry sources said.
Six months into the job, President B.J. Habibie's government has yet to come to grips with the problems created by decades of monopolistic control in the oil sector.
They said while some inroads had been made in the larger deals such as oil exploration, the bulk of the industry was still dogged by the legacy of corruption, collusion and nepotism -- known in Indonesia as KKN.
"Initially there were some signs changes were taking place but after that nothing much has changed. Now there is a danger that the old people are coming back," one regular supplier said.
Industry sources said no concrete steps have so far been taken to either liberalize the domestic market or make the country's multi-billion dollar oil trade transparent.
Indonesia, Asia's sole member of the Organization of the Petroleum Exporting Countries (OPEC), achieved net crude exports of 220 million barrels and net oil product imports of 35 million barrels in 1997.
Last year, crude and oil product exports earned the country $6.8 billion, while $3.6 billion was paid out for imports. Indonesia's current rate of oil production is around 1.30 million barrels-per-day (bpd).
"On oil exports and imports, we will make it transparent," Mines and Energy Minister Kuntoro Mangkusubroto said on May 25, en route to the first meeting of the country's new cabinet.
Action swiftly followed, as state monopoly Pertamina axed the near 20-year-old exclusive sale and purchase arrangement it had with two affiliates -- Perta Oil and Permindo -- co-owned by friends and family members of former President Suharto.
But that was as far as it went. Instead of trading through the affiliates, Pertamina is now buying and selling directly but the deals remain shrouded in secrecy.
The first few deals were struck exclusively with international oil companies and later expanded to include a select group of smaller companies, but always through private negotiations.
The promise of an open tender system was not fulfilled.
Recently, eyebrows were raised and murmurs of KKN resurfaced amid the trading community when an hitherto unknown in the Indonesian business, Singapore Petroleum Co (SPC), began chalking up impressive sales to Pertamina.
Traders said SPC, a small Singapore-based firm with a 100,000- bpd direct equity refining capacity, was backed by a company related to the Indonesian conglomerate Bakrie Brothers.
They said the company, Petrocom, was set up in Singapore by Nirwan Bakrie, one of the major shareholders of the now-shunned Permindo, seeking to re-enter the lucrative Indonesian oil business.
Officials at SPC declined to comment on their recent sales to Indonesia and Petrocom officials were not available.
"This is what happens when you don't have an open tender system. There is always the danger of this, of some personality or companies clicking and they do the business all the time," another trader said.
"There is a concern, a feeling in the market that this guy has the last look. They have a privilege which should have been long gone," another said.