Soeharto family's oil, gas interests suffer heavy blow

By Johannes Simbolon

JAKARTA (JP): A death knell has been sounded for Soeharto's family, relatives and friends who have dominated the country's oil and gas industry for decades.

They have lost at least 30 lucrative business contracts with the state oil and gas company Pertamina in less than five months of the former president's downfall.

With Pertamina's continuing efforts to root out corruption, collusion and nepotism in its business practices, they are likely to lose even more in the near future.

Pertamina exploration and production director Priyambodo Mulyosudirjo said on Friday that the company, which had been considered as one of the country's worst symbols of corruption, had listed 159 businesses believed to have received oil and gas contracts from it through dubious methods.

Most of the 159 companies are linked to Soeharto's family and cronies, while the others are connected to high-ranking officials, who Priyambodo refused to name.

"Pertamina is continuing to investigate other projects and contracts. So the final figure could be higher than this," he said in a news conference.

Pertamina said the 159 companies were involved in a wide range of activities, including oil exploration, fuel and crude oil imports, gas purchasing, distribution of fuel for the provision of gasoline chemicals and catalysts, liquefied natural gas (LNG) development and LNG shipping.

The state firm has already terminated 32 contracts, including 14 contracts on materials supply -- a move which should enable the state company to save US$64.7 million in dollar-denominated expenses and Rp 313.3 billion ($34.8 million) in rupiah- denominated costs.

Contracts scrapped by Pertamina include deals for crude oil and fuel imports with PT Perta Oil Marketing, controlled by Soeharto's youngest son Hutomo "Tommy" Mandala Putra and Mohamad "Bob" Hasan, and PT Permindo Oil Trading, controlled by Soeharto's second son Bambang Trihatmodjo, his friends in the Bimantara group and Soeharto's cousin Sudwikatmono.

The government had given both companies the right to monopolize crude oil and fuel imports for more than a decade.

Pertamina has stopped using the freight forwarding service of PT Sewu under Tommy.

It has also stopped buying tetra ethyl lead and gasoline additives from Bambang's PT Bumi Artika Citra; PT Menara Bumi, controlled by Soeharto's step brother Probosutedjo; Tommy's PT Emas Baharu Putra; and PT Mahoni Harapan, owned by Soeharto relative Ibnu Hardjono.

The companies served as agents for Octel, Ethyl, Novoktan and El France -- the world's only producers of tetra ethyl lead and gasoline additives.

Pertamina has stopped buying catalysts from PT Argamulya Buana Tirta (Tommy) and PT Indopratama (Tommy), bentonite from PT Indobent Wijaya Mineral (Sudwikatmono) and acetic acid from Indo Acidotama (Sudwikatmono).

Pertamina has also annulled a contract with Permindo and Elnusa for the modification of the Balikpapan II refinery in East Kalimantan. Elnusa is a consortium set up by Pertamina and Bambang.

Four contracts for the development of liquefied petroleum gas (LPG) in Java have also been terminated with PT Dharmasatrya Artha Sentosa (Bambang), PT Dwipangga (Siti Hutami Endang Adiningsih), Bina Jasa Hantarindo (Bambang), and a consortium made up of the Bimantara group, controlled by Bambang, and El Nusa.

Priyambodo said the contracts had been awarded to the companies without competitive bidding and would be retendered in open biddings.

Pertamina has annulled deals with PT Asia Pacific Refinery Indonesia (Bambang and Bambang R. Soegomo) for the development of an oil refinery with a processing capacity of 300,000 barrels per day (bpd) in Situbondo, East Java; and with PT Nusamba (Bob Hasan) and PT Buana Ganda Perkasa (Probosutedjo) for the development of oil refineries of similar capacities in Lombok, West Nusa Tenggara and Probolinggo, East Java.

A contract for the development of a 10,000-bpd refinery plant in Cepu, Central Java, that had been awarded to PT Humpuss Mini Refinery Cepu (Tommy) has also been scrapped.

Pertamina has rejected a proposal from PT Kanugrahan Kartika Perkasa, which is owned by the military foundation Kartika Eka Paksi, to develop a 150,000-bpd refinery in Cilacap, Central Java.

A proposal from a joint venture between PT YKPP Usaha Nusa, a business unit of the company's employee welfare foundation YKPP, and Vico Enterprise to build a LPG recovery plant in East Kalimantan has also been discarded.

The state company rejected proposals from PT Humpuss Trading (Tommy) to cooperate in developing a purified terephthalic acid plant in Plaju, South Sumatra, PT Trypolita Indonesia (Sudwikatmono and Soeharto's crony Liem Sioe Liong) to manufacture polypropylene, PT Indocokes Prima Perkasa (Sudwikatmono) to cooperate in developing a green coke plant in Dumai, and PT Bayu Pribumi Sakti (Bambang) to build a LPG and natural gas extraction plant in East Kalimantan.

A 1996 proposal by PT Samudra Petrindo Asia, a subsidiary of the Bimantara group, in a partnership with Norway's Kvaerner to develop the LPG floating storage and its offloading in Java will no longer be considered.

Pertamina will not renew its insurance contracts with its affiliate PT Tugu Pratama Indonesia, partly owned by Bob Hasan.

Insurance deals with Tugu Pertama, which at present underwrites all of Pertamina's insurance contracts, will not be extended. The state company will hold a tender for the indemnity insurance as soon as the current contracts expire.

Priyambodo also said Pertamina was negotiating with Pacific LNG Transport, a subsidiary of PT Humpuss (Tommy), to reduce the cost for the transportation of LNG from the Bontang LNG plant to overseas markets.

Pertamina contracts with PT Hanurata Coy -- owned by Soeharto- led foundations including the Harapan Kita, Trikora and Supersemar -- for the making of lubricants was revoked last March when it was found that Hanurata had produced fake lubricants. The state company subsequently reported the case to the police.

Pertamina has also appealed to foreign oil companies operating here to take over shares owned by Soeharto's family and cronies in their joint projects.

There are currently eight production sharing contracts (PSC) and six technical assistance contracts involving Soeharto's family and associates.

One of the PSCs is the onshore and offshore Kangean block in East Java, which is operated by Arco of the United States in a joint venture with Bimantara.

Unocal of the U.S. has also been called on to take over the shares of PT Nusamba Kaltim Pratama (Bob Hasan) in the offshore Rapak, Makassar Straits, block in East Kalimantan.