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.