P

ertamina Lubricant, a business unit of state oil and gas firm PT Pertamina, has allocated Rp 8 trillion (US$896 million) for its capital expenditure this year to expand its businesses overseas and increase revenues, a company executive says.

Pertamina vice president of lubricants Supriyanto Dwi Hutomo said on Monday in Jakarta that around
Rp 1 trillion, or 12.5 percent, of the figure would be spent on its expansion moves into overseas markets. Export growth has grown from 5 percent to 6 percent per year and still offered enormous room for growth. Pertamina exported 116,797 kiloliters of lubricants last year — marine as well as automotive — to 19 countries, including to Australia, Bangladesh, Belgium, China, Japan, Malaysia, Myanmar, the Philippines, Saudi Arabia, Singapore, Taiwan and Timor Leste.

“We are looking from our mapping at which countries can become our hub to export to in surrounding countries, such as Thailand, which can serve for the Indo-China market, and Dubai, which can become a hub for the African market,” he told reporters during a press briefing.

Supriyanto added that beside Thailand and Dubai, his unit was also looking into possibilities to expand its business in Australia, the United States and Spain. It would likely produce its lubricants overseas by cooperating with lube oil blending plants in these countries to achieve efficient production.

“We have done this kind of cooperation in Singapore, where we work with the Feoso lube oil blending plant. Our additional output will then be generated from this joint production,” he said.

Apart from expanding its overseas market, Pertamina Lubricant would also use its capital spending to try to maintain a 60 percent share in the domestic market. The country’s market for lubricants 720,000 kiloliters last year was estimated to grow by 2 percent and 3 percent annually.

Its expenditure, among others, would be used to buy raw materials, particularly additives, which at present were imported from international additive suppliers, he said. Pertamina has spent about Rp 1.5 trillion for additives per year.

Supriyanto said that in the last two years, Pertamina had tried to reduce its dependence on imports by producing an additive for its own facility in Jakarta, which totaled between 20 percent and 25 percent to its overall additive needs.

Pertamina currently operates three lubricant blending plants in Jakarta; Cilacap, Central Java and Surabaya with a total annual capacity of 560,000 kiloliters.

Pertamina Lubricant booked Rp 9 trillion in revenue and Rp 1.7 trillion in profit last year. This year, it expects its revenue and profit will rise by 13.33 percent to Rp 10.2 trillion and by 17.65 percent to Rp 2 trillion respectively.