Pertamina to build new gas stations

Pertamina to build new gas stations

The Jakarta Post, Jakarta

State-owned oil and gas company PT Pertamina plans to build
hundreds of new gas stations across the country in hopes of
eventually controlling at least 20 percent of the country's total
gas stations as the fuel retail sector will be liberalized next
year.

"We want to develop our own gas stations and run them
directly. We'll try to control at least 20 percent of the total,
but of course it will depend on our budget," Pertamina director
of marketing and business Ari Soemarno was quoted as saying by
detik.com on Saturday.

Ari added that Pertamina was also ready to compete with
multinational firms which have expressed interest in entering the
oil and gas downstream sector, such as BP PLc., ExxonMobil,
Shell, Petronas and Caltex, all of which have more working
capital than Pertamina.

"We really should get ready and be prepared to compete with
them since the liberalization process is drawing near," he
asserted.

According to Law No. 22/2001, Pertamina's monopoly rights in
the management of fuel distribution in the country will only be
valid until November 2005.

Thus, private investors -- both local and foreign -- can enter
the downstream sector, which consists of four main areas:
processing, transportation, storage, and marketing.

The Downstream Oil and Gas Authority Body (BPH Migas) will act
as the regulator.

Several experts have said that multinational companies would
likely dominate the downstream sector due to the big investment
required and the risky nature of the business.

Entering the downstream business -- whether it is the
processing or distribution -- needs as great an investment as the
upstream sector, but typically produces lower returns,
particularly considering the weak purchasing power of most
Indonesian consumers.

Pertamina, experts said, would probably become the sole local
company to compete in the sector since it already had all the
infrastructure needed.

Ari said that it would cost about Rp 5 billion (US$538,909) to
build one gas station, excluding the price for the land.

Currently, Pertamina owns and operates only seven gas stations
in Jakarta, Palembang, Medan, Makassar and Surabaya out of around
2,537 across the country.