Pertamina denies alleged KKN in new contracts

Pertamina denies alleged KKN in new contracts

JAKARTA (JP): State oil and gas company Pertamina dismissed
allegations that graft was involved in its multi-billion dollar
business of importing petroleum and oil products.

"Based on the information we received from Pertamina, there
are no elements of corruption, collusion and nepotism in its oil
trade. All its deals are transparent," Minister of Mines and
Energy's spokesman Budhi Sulistyo said on Friday.

Pertamina, in a written statement to the ministry, has denied
a Reuters report, which was quoted by The Jakarta Post early last
week, that there is no transparency in its export and import of
crude oil and oil products.

Traders in Singapore complained that Pertamina had made direct
deals with international oil companies and select smaller
companies to buy petroleum and oil products, instead of staging
an open tender system.

The deals were shrouded in mystery, the traders said, using as
an example Pertamina's deal with Singapore Petroleum Co. (SPC),
which they claim is backed by Petrocom -- a company related to
the Indonesian conglomerate Nirwan Bakrie.

Indonesia, though an oil exporting country, imports about 70
million barrels of crude oil per year to feed Pertamina's
refineries. Due to the limited capacity of its refineries,
Pertamina also imports about 15 percent of the fuel needed to
fulfill the domestic consumption of 52 million kiloliters per
year.

Trading of both of these products was conducted by two
companies linked to Soeharto's family and cronies, Perta and
Permindo, for about 20 years, until July of this year when, on
the government's order, Pertamina canceled the contracts with the
companies and began to conduct the trading itself.

Bakrie is one of the shareholders of Permindo.

Budhi said that since July, Pertamina has been giving all
petroleum and oil product suppliers, including major oil
companies, refineries and international oil traders, the
opportunity to make open tenders to the company.

Pertamina will choose suppliers which offer the most
competitive price, the most favorable terms of payment and are
able to deliver supplies on time and at the volume demanded.

"In this case, Pertamina will only deal with companies which
have international reputations in oil trading," Budhi said.

Budhi quoted Pertamina's statement as saying that SPC is one
of the suppliers which meet the criteria set by Pertamina,
refusing, however, to comment on the alleged connection between
SPC and Bakrie.

Nor did Pertamina say if it had conducted open bidding to
select the suppliers.

Pertamina's director for general affairs Hadi Daryono, earlier
said that Pertamina had signed one-year contracts to buy crude
oil directly from several producers, including Malaysia's
Petronas and Saudi Arabia's Aramco. It is also seeking a similar
contract to buy oil products from Kuwait Petroleum.

Only a certain portion of the country's demands for crude oil
and oil products will be bought from traders, he said.

He stated that Pertamina could save between 10 and 15 cents
per barrel under the direct purchase scheme.

A source at Pertamina told The Jakarta Post that Pertamina's
move to cancel contracts with Permindo and Perta, and to cut out
the role of middlemen in its oil trade, has frustrated some
traders in Singapore who had fared well during the era of
Permindo and Perta.

"The frustrated people, whom we have well identified, now
spread negative rumors to undermine this new, better trading
system," the source said. (jsk)