Pertamina expects assets to increase

Moch. N. Kurniawan, The Jakarta Post, Jakarta

State oil and gas company Pertamina will see its assets increase in value from the current Rp 100 trillion (about US$9.8 billion) once asset valuation this year is completed, according to company finance director Ainun Naim.

Ainun said last week that the increased asset value would be a consequence of the planned transfer of some oil refineries and other assets now in the hands of the government.

He also said that oil reserves would be included as company assets.

"Our assets will increase. They won't decline although we will have to separate the company's assets from the government's assets," he told The Jakarta Post.

Pertamina is currently in the process of selecting an independent appraiser to assess the company's assets and separate those belonging to the government.

The asset evaluation is part of the company's plans to transform itself into a limited liability company by early 2003, as stipulated in the new Oil and Gas Law that came into effect in November last year.

Under the new law, Pertamina is to be purely a oil and gas firm that no longer has the regulatory function that it had in the past. As a consequence, Pertamina will receive certain assets from the government.

Ainun declined to give an estimate of Pertamina's new asset size, but one official said the company's assets could double in size.

Meanwhile, Pertamina spokesman Ridwan Nyak Baik said the increased asset value would provide the company with certain benefits, such as more bankability and greater confidence to forge alliances.

"This is like giving us more ammunition to go to war," he said.

Pertamina, in its new form, will become a holding company for many subsidiaries not only in oil and gas upstream and downstream activities but also in the geothermal power and the petrochemical sectors.

Separately, oil analyst Ramses Hutapea said Pertamina would face some difficulties when the government transferred certain assets to the company due to possible conflict with existing contracts between the government and oil and gas contractors.

He said the government's plan to hand over many oil platforms and liquefied natural gas (LNG) plants in the country to Pertamina would lead the company to charge other oil companies using the facilities.

The charge will be necessary for Pertamina because it will operate as a profit-oriented company, Ramses said.

But the charge could spark protests from many oil companies as it would violate their contracts, under which they are not liable to such a charge, he added.

Ramses also warned that it was pointless to have huge assets if Pertamina's oil and gas operation was not efficient.

He feared that Pertamina could end up like Argentine oil company YPF, which was taken over by Spain's oil giant Repsol following its failed transformation.

"Look at the result now. YPF can't do anything to help Argentina recover from its economic crisis," Ramses said.

He urged the government to amend the new Oil and Gas Law and learn from the Malaysian state oil and gas firm Petronas, which has become a world leading oil and gas firm even though it is 100 percent owned by the government.