Pertamina Cuts Costs; Saves US$172tn

TEMPO.CO, Jakarta - State oil and gas company PT Pertamina (Persero) claims to have cut down on expenses and saved US$172 million in January-May this year. Pertamina spokesperson Wianda Pusponegoro said they efficiency figure is above this year's target of US$68 million.

"The efficiency effort is supported by the decline in world oil prices," she said.

One of the things Pertamina did to cut costs was by transferring the task to procure crude oil from Pertamina Energy Trading Ltd (Petral)to its Integrated Supply Chain (ISC) division. This move, Wianda said, resulted in a cost saving of US$37 million.

The biggest savings came from the centralization of procurement, which was US$66 million.

Wianda said Pertamina also minimize oil production shrinkage volume by improving governance in various business lines; allowing the company to save US$64.4 million.

However, even with the expense cuts Pertamina's net profit in the first quarter 2015 only amounted to US$28 million, far below its target of US$427 million.

According to Pertamina president director Dwi Soetjipto, the low net profit achievement was due to a decline in selling prices following the global oil downtrend to around US$50 per barrel.

From January to March 2015, Pertamina booked US$10.67 billion in revenues. The company's cost of sales amounted to US$9.67 billion while operating expenses reached US$449 million. Operating income therefore reached US$550 million while earnings before interest, taxes, depreciation amortization (EBITDA) amounted to US$932 million.

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