Pertamina's board reviewing contracts
The Jakarta Post, Jakarta
The new management of state oil and gas company Pertamina is reviewing all contracts signed by the previous management in a bid to filter out less profitable projects.
Pertamina president Ariffi Nawawi said on Tuesday that the review, the first major task to be carried out by the new management, was to get the firm focused on its main goal as a business entity -- that is to seek profit.
"In the future, Pertamina will only prioritize the profit- boosting projects. Pertamina will try to continuously increase its profits, now that it has become a limited liability company," Ariffi said.
"So, we are now reviewing all those projects because it would relate with the company's financing and scale of priorities. We hope the review will be completed by year-end."
While the details remain sketchy, the review could well lead to the cancellation of a number of projects being planned.
With increased profits, Pertamina will boost its competitive edge against new players who are ready to challenge its domination in the country's downstream sector, Ariffi said.
"We also plan to maintain our current strong infrastructure in order to better compete with those new players," he said, while expressing optimism that Pertamina under his leadership would be able to do all that.
Ariffi, a career Pertamina official, took the company's top post in September to replace Baihaki Hakim. He was previously a director in the company.
Upon taking the post, Ariffi said he would focus first on strengthening the organization, human resources and marketing sectors of the company, while also giving more attention to the lucrative petrochemical industry.
Ariffi also said that Pertamina expected to increase its crude oil and gas output from the targeted 144,000 barrels per day next year to 206,000 barrels per day in 2008.
Currently, the country's crude output is about 1.1 million barrels per day.
Ariffi added that the company also aimed to boost exploration so as to increase its reserves to 1.272 billion barrels in 2008 from a 1.104 billion barrel target in 2004.
Indonesia has total proven reserves of 5.12 billion barrels.
The company has said that it plans to invest US$5 billion within the next five years, with 70 percent of the investment going to the upstream business, which includes exploration.
The remaining 30 percent will go to the downstream business.
On the same occasion, Pertamina director for downstream Hari Purnomo said the company was exploring the possibility of forging a partnership with its Malaysian peer Petronas for the marketing of fuel oil products.
"The volume to be involved in the partnership is yet to be decided. But, while Pertamina will provide oil-based fuel, Petronas is allowed to market in its own brand, by adding another additive agent," Hari said as reported by Antara.
As such, he pointed out, Pertamina would only supply fuel to gas stations owned by either local private companies or Petronas.