Indonesia to Increase Reserves Oil and Refinery

A worker PT Pertamina in oil wells in Bunyu Island, East Kalimantan.

Indonesia to Increase Reserves Oil and Refinery

This plan will enable long-term contracts are stable with foreign producers and reduce opportunities for corruption in Petral.

The government plans a major expansion of oil storage and will build more refineries as part of a comprehensive energy reform that will help eradicate corruption in Pertamina.

President Joko "Jokowi" Widodo launches overhaul of oil and gas sector last Friday to dismiss the entire board of directors of Pertamina and promising a comprehensive audit of its trading subsidiary, Petral.

When completed, the plan to increase the storage and refinery capacity will allow Indonesia to shift from buying gasoline and diesel in the spot market are not stable to long-term contracts are stable with foreign producers. It also will reduce the chances of corruption in Petral.

"With unlimited storage, which can be done is to buy in commodity markets and become dependent on the market," said Ari Soemarno, presidential adviser and former head of Pertamina, the Reuters news agency.

Minister of Energy and Natural Resources Sudirman Said told reporters last week: "Every transaction is hidden clearly has the potential (for corruption). The agreements directly reduce the potential ... and reduce the role of the realtor."

The government plans to add a minimum of 9.4 million barrels for the new fuel storage capacity in 2019, or an increase of about 40 percent, at a cost of US $ 2.44 billion, according to officials of Pertamina.

Indonesia, which is expected to be the world's largest importer of gasoline in 2018, wants to increase the operational reserve be enough material for 30 days, up from 18-23 days.

In the long term, Pertamina wants to increase the refinery's capacity six to 1.5 million barrels per day of 1 million barrels per day at the moment. The company is also considering investing in new refineries, although not build anymore since 1994.

Removing a Broker

The clerk at the gas station in Jakarta Pertamina petrol purchases count money.

The clerk at the gas station in Jakarta Pertamina petrol purchases count money.

President's plan also seems to be ruled out Pertamina Energy Trading Limited (Petral) based in Hong Kong.

The company, which does business trade of Singapore, holds almost a monopoly of trade billions of dollars of crude oil and oil products from in and out of Indonesia.

Petral reported revenues of US $ 31.5 billion and net income of $ 47 million in 2011, the latest data given the company page.

Petral regularly buy gasoline, diesel and jet fuel from Petronas Malaysia, Unipec in China, Royal Dutch Shell and others.

However, the lack of transparency of the oil trade has fueled fears that the transactions can be easily manipulated by the so-called president of the oil mafia, which is believed to steal up to $ 400 million per year, according Soemarno.

Officials Petral can not be questioned. Oil traders in Singapore say they have not seen major changes in the operations Petral.

Last week, Minister of State Owned Enterprises Rini Soemarno, who is also the brother Ari, said he would consider relocating Petral to Indonesia from its offices in Hong Kong and Singapore, a step that may allow better control of the government.

Ministry of Energy and the Corruption Eradication Commission (KPK) plans to conduct separate audits on Petral to ensure there is no abuse.

"So far we have not had any conclusions regarding Petral. We are still waiting for the recommendation," said Minister of Energy and Mineral Resources Sudirman Said told Reuters on Monday (1/12).

Ministry of Energy and Mineral Resources has asked a team of independent experts to recommend specific government policies to clean Petral, Pertamina and the entire energy industry. Report will be out in six months.

"We want to build an institution that allows everything in sight. Whatever is done Petral ... everyone will know," said Faisal Basri, head of governance reform team of oil and gas in the Ministry of Energy and Mineral Resources. (Reuters)/VOA