Perta Oil continues operations as normal

Perta Oil continues operations as normal

HONG KONG (Dow Jones): Perta Oil Marketing Ltd., an affiliate of Indonesian state-owned oil company, Pertamina, is operating as usual, despite government statements that Pertamina's affiliates are under review, a source close to Perta Oil Marketing Ltd. said.

"Business is going on as normal," he said, adding that Perta Oil still expects to handle June oil product allocations for state-owned oil concern Pertamina.

Perta Oil hasn't been notified officially of any plans to cease or change its relationship with Pertamina, Asia's largest exporter of crude oil, the source said.

Another source close to Perta Oil said, however, it wasn't clear why Pertamina has delayed the release of June oil product allocations, originally expected by May 20. Apart from a 3.2 million barrel low sulfur waxy residual fuel allocation issued Wednesday, Pertamina's June allocations have been delayed by more than one week.

The first source also described reports that Pertamina will operate its trading directly as a "rumor that is wrongly developed."

On Monday, the Minister of Mines and Energy Kuntoro Mangkusubroto said Pertamina will review longstanding marketing arrangements with two of its affiliates that have ties to family members of former president Soeharto. The minister added that affiliates overcharge Pertamina for their services.

The companies, Singapore-based Perta Oil Marketing and Hong Kong-based Permindo Oil Trading Co., receive monthly allocations of crude oil, petroleum products and liquefied petroleum gas to buy or sell in the spot market.

Pertamina should buy back Soeharto family stakes in oil trading affiliates instead of terminating contracts with the affiliates, the first source said.

"If anything happens (from the review), it would only be on a shareholder level," the source close to Perta Oil said. "The easiest way (to resolve questions of nepotism) would be for Pertamina to buy back shares from minority shareholders."

The source defended Perta Oil's performance as a trading affiliate, adding that "Perta Oil is managed by Pertamina (and) key employees are from Pertamina or Perta directly."

The Humpuss group, controlled by Soeharto's youngest son, Hutomo "Tommy" Mandala Putra, owns 25 percent of Perta Oil. A unit of the Nusamba group, which also has close ties to Soeharto, holds 25 percent, with Pertamina holding the remaining share, the source said.

PT Permindo, which is 65 percent owned by Soeharto's son Bambang Trihatmodjo and business associates, including Soeharto's cousin Sudwikatmono, and Nirwan Bakrie, is the other trading affiliate whose contracts are under review by Kuntoro.

Pertamina owns 35 percent of the affiliate.

Pertamina and PT Permindo couldn't be reached for comment.