Pertamina expects assets to increase

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.