Pertamina's two Japan subsidiaries to merge

Pertamina's two Japan subsidiaries to merge

TOKYO (Reuter): Pertamina's two Japanese crude and oil product
subsidiaries, Far East Oil Trading Co Ltd. and Japan Indonesia
Oil Co Ltd., said yesterday they will merge into a 50-50 venture
effective Jan. 1, 1996.

The new company, to be called Pacific Petroleum and Trading Co
Ltd., will be capitalized at one billion yen.

The move is seen by industry sources as part of an effort by
the companies to reduce operating costs on the back of reduced
oil supply from Indonesia and lower profit margins.

Crude oil exports to Japan from Indonesia have been cut
significantly in recent years because of rapidly growing domestic
demand in Indonesia. Exports to Japan once accounted for over 10
percent of Indonesia's output, and the two affiliates handled a
total of 200,000 barrels-per-day.

"Our crude imports from Indonesia have been cut to roughly 65
percent of the peak time," an official for Japan Indonesia Oil Co
said.

According to the Far East Oil Trading Co, it imported 5.13
million kiloliters (kl) of crude oil and 1.87 million kl of oil
products from Indonesia in 1994.

Japan Indonesia imported 6.24 million kl of crude oil and 3.81
million kl of oil products in the 1994-95 year.

The two companies were considering various restructuring
measures, although specific plans were not decided yet, the Japan
Indonesia official said.

A Far East official said the restructuring would include
cutting the number of workers through voluntary early retirement.

"The number of employees at the two (firms) combined will be
about half of the current 72 by the end of March," he said.

Pertamina, Indonesia's state-run oil concern, has several
marketing affiliates, including Far East and Japan Indonesia who
supply oil to Japan, Korea Indonesia Petroleum Co which supplies
to South Korea and Perta Oil which supplies to Taiwan, Italy and
the Philippines.

Pertamina has a 50 percent stake each in Far East and Japan
Indonesia. Other shareholders in Far East are Japanese electric
power companies and oil companies.

Japanese automobile giant Toyota Motor Corp. holds over 10
percent equity in Japan Indonesia. Japanese electric power
utilities and oil companies hold the remainder.