Pertamina will remain at leading position despite liberalization

State-owned oil and gas firm Pertamina will remain at a leading position in the domestic oil industries even after the government liberalizes the oil and gas sector when a proposed oil and gas bill is implemented, according the director general of oil and gas at the Ministry of Energy and Mineral Resources, Rachmat Sudibyo.

Speaking to reporters on the sidelines of an international oil conference in Jakarta on Wednesday, Rahmat said that Pertamina had all the infrastructure both in the upstream and downstream level and this would make Pertamina a tough entity to beat for any new comer.

Pertamina, for instance, has a number of large oil refineries, tankers, a number of special ports for oil tankers, a good fuel distribution network and various other infrastructure resources.

"With those strengths, Pertamina doesn't need to be worried about its position. Any new comer will not be able to force its way to take Pertamina's leading position," Rachmat said.

Any new comer wanting to compete with Pertamina would need a huge investment to build such infrastructure, and it would take some times to build those kinds of infrastructure.

"To import fuels, for instance, it would need a tanker, not a drum, and the tanker must berth on a special port. And thus far, it's only Pertamina that has such ports. Even if they want to build such ports, it would take some times. Thus, it is impossible for new comers to start businesses right away when the oil and gas sector is opened. It's certain that Pertamina will remain in the leading position," Rachmat said.

Besides, the draft bill stipulates that the government would not liberalize the upstream oil industry. The government would still hold the privileges in the upstream level. And in the end, this would benefit Pertamina.

Meanwhile, Pertamina senior vice president for corporate affairs Sjayrial Daud said the state-owned firm would remain focusing both on the downstream and upstream business.

"We are going to focus both on the downstream and upstream business when the law is implemented," Daud said.

As recently reported, Pertamina -- in a concrete effort to refocus on the downstream business -- has tried to buy back over 1,000 gas and fuel stations which it sold off to the private sector 10 years ago.

The bill, now awaiting ratification by the House of Representative (DPR), will allow the establishment of effective competition in the country's fuel supply, which also means allowing foreign players to do downstream business in the domestic market.

Speaking at the conference, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government would submit the oil and gas draft bill to DPR by the end of September.

"The bill is expected to go to DPR shortly, hopefully by the end of the month," Purnomo told the conference. (*)