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.