Government Unaware of Pertamina-Sonangol Cooperation

TEMPO.CO, Jakarta - I Gusti Nyoman Wiratmaja Puja, acting Director General for Oil-and-Gas at the Ministry of Energy and Mineral Resources, said that he is unaware of the reason behind the cancellation of preferential pricing on oil purchases by the state oil-and-gas company, Pertamina, from Angola-based oil company Sonanggol and added that he is also unaware on whether the cooperation deal between Pertamina and Sonanggol is an intergovernmental cooperation, or a business-to-business direct interaction.

"I have yet to receive any clarification from both parties," said Wiraatmaja to Tempo on Monday, March 16, 2015. Wiraatmaja explained that if the deal between Pertamina and Sonangol was indeed brokered by the Indonesian government, then the price that had been demanded by President Joko "Jokowi" Widodo should not have been rescinded.

Wiratmaja also promised that his authorities would do their best to investigate and determine the cooperation scheme that governs the deal between Pertamina and Sonangol, and that the Indonesian government would do their best to establish the reason behind the revocation of the 15 percent discount, which had initially been agreed upon by Sonangol. "If the deal had gone through, then the cost of fuel purchases would have been much lower," he said.

Previously in November 2014, Pertamina and Sonangol had met and signed a framework agreement, wherein three points was agreed upon. First, Sonangol will allow Pertamina to buy fuel from the Angola-based company at 15 percent below global prices. Second, Sonangol would provide technical assistance to Pertamina to build a crude oil refinery in Indonesia, in exchange for concessions for exploration in Indonesia's upstream oil-and-gas sector.

However, based on information acquired by Tempo, the deal was revised due to several technical glitches. Plans to build a local refinery in Indonesia was cancelled in favor of building a refinery facility in Angola instead, despite the fact that Sonangol had dispatched two shipments containing a total of 1.9 million barrels of oil - the first of which is known to have been received by Pertamina in February 2015.

The Head of the Commission for Energy at the House of Representatives (DPR), Kardaya Warnika said that he regretted the fact that the potentially lucrative deal between the two companies have ended in a limbo - especially since Pertamina has had to pay the shipments of oil at market prices. "What's the point of this entire deal if we don't receive any benefit from this cooperation?," said Kardaya to Tempo on Monday.

According to Kardaya, the appropriate authorities within the government must strive to clarify the nature of the cooperation between Pertamina and Sonangol, and what kind of interest and/or benefit  does Pertamina and Sonangol aim to derive from such an uncertain cooperation. "To date, the Indonesian government, Pertamina nor Sonangol has yet to come up with a satisfactory explanation with regards to this bizarre cooperation," he said.

Pertamina has countered by sating that the decision to import oil from Sonangol is a pure business decision which was made between two profit-seeking businesses - as such, prices should be determined by the market, and discounts should not be applied nor considered given the circumstances. “What needs to be clarified is that a Sonangol agreed to give a discount once a joint venture between Pertamina and Sonangol is approved, agreed and is up and running. Right now, the joint venture has yet to be agreed upon - as such, talks about discounts should be left out of the discourse for the time being," said Pertamina's spokesperson, Wianda Pusponegoro through an e-Mail sent to Tempo dated Friday, March 13, 2015.

ALI HIDAYAT | AYU PRIMA SANDI