Oil traders make beeline to Pertamina offices

Oil traders make beeline to Pertamina offices

SINGAPORE (Reuters): Oil traders are making a beeline to the offices of the just liberalized Indonesian state oil monopoly Pertamina, jostling for lucrative multi-million dollar supply contracts, industry sources said yesterday.

"Everybody is flying in there to shake hands," said one trader who had just returned from his round of making new friends at Pertamina.

"We are just going in there to say I don't know anything that happened. I just want to do business."

Since the early 1980s, Indonesia had bought and sold most of its oil through two Pertamina affiliates which are majority owned by friends and family members of former president Soeharto.

The new government of President B.J. Habibe has ended this cosy relationship and has asked Pertamina to trade on its own -- opening a new opportunites for those left out of the old loop and forcing those who were in to make new friends.

The traders' efforts are not for peanuts as Pertamina's monthly oil import and export bill easily tops $300 million.

"We are going there to get a feel for things. No one's coming back with anything concrete," a trader with one oil major said.

"Nobody's sure how things are handled there now, and they want to keep an eye on it," said another trader recently in Jakarta.

Pertamina, which owns 30 to 35 percent of the two trading affiliates -- Perta Oil Marketing and Permindo Trading Oil Co -- has not severed links with the two companies.

Instead, traders suggest that staff of the two companies are likely to be retained by Pertamina in some form to bridge the gap between the oil monolith and the international trading community.

"They are all good friends. The official link with (Soeharto's son) Tommy and (Soeharto's old friend) Bob Hassan won't be there, but Pertamina will use the two companies to help them do business," a trader said.

"One the ground, Pertamina doesn't know what's going on."

Traders said Pertamina is likely to do its first direct trade with an established oil major, as this is politically the correct thing to do.

"I think the first deal must give the impression of transparency and a deal with an oil major will do this," a trader said.

Industry sources said that although the bulk of the Singapore- based trading community has made the 90-minute flight to Jakarta, most remain concerned over Pertamina's financial condition.

"The big question is the finances. Nobody are sure how they are going to raise the finances," one trader said.

In the past, Perta and Permindo handled all of Pertamina's finances and the oil monopoly now has to sort out its finances before embarking on its new role.

Traders said one of the options open to Pertamina is to tap a $5 billion Singapore government trade financing guarantee to underwrite oil imports.