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Pertamina gets major overhaul

The government announced on Friday a major management shake-up at state-owned oil and gas giant Pertamina, with all nine members of the board of directors being replaced in light of the company’s declining oil production

Raras Cahyafitri (The Jakarta Post)
Jakarta
Sat, November 29, 2014

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Pertamina gets major overhaul

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he government announced on Friday a major management shake-up at state-owned oil and gas giant Pertamina, with all nine members of the board of directors being replaced in light of the company'€™s declining oil production.

Dwi Soetjipto, who previously served as president director of state-owned cement company Semen Indonesia, was named Pertamina president, replacing Karen Agustiawan, who tendered her resignation in October.

State-Owned Enterprises Minister Rini Soemarno said Dwi was chosen to lead the oil and gas company because of his success in consolidating several state-owned cement firms and integrating them into Jakarta-listed giant Semen Indonesia, which has also successfully spread its wings in the Southeast Asian market through its subsidiary in Vietnam.

Dwi beat 16 other candidates to win the oil giant'€™s top post.

Speaking following his appointment, Dwi said turning Pertamina into a major energy company in the region would be his priority. In order to meet this goal, he said he would improve efficiency and productivity both in upstream and downstream business, in addition to improving the supply-chain system and freeing the company from corrupt practices.

'€œThe public has huge hopes for Pertamina. I and the other directors will try to meet their expectations,'€ Dwi said in a press briefing.

Pertamina'€™s eight directors were all dismissed. Dwi will work with three new directors, namely Arief Budiman, currently a director at research firm McKinsey, Yeni Andayani, Pertamina'€™s senior vice president for gas, and Ahmad Bambang, president director of Pertamina'€™s subsidiary shipping business PT Pertamina Trans Kontinental.

'€œEight directors are too many for Pertamina. We have stressed the importance of efficiency to Pak Dwi. The three new directors will help him decide the ideal number of directors '€” we expect the result next week,'€ Rini said.

The specific duties of the three directors have yet to be determined. Dwi did say, however, that Arief would probably oversee Pertamina'€™s finance, supply-chain and marketing systems.

  • Entire Pertamina board of directors dismissed
  • New president Dwi has no background in energy, previously worked in cement
  • Company has been struggling, faces challenges ahead

Energy and Mineral Resources Minister Sudirman Said insisted that the appointment of an outsider as Pertamina'€™s new president would not pose any problem. '€œThere is nothing to worry about,'€ he said. '€œAll professionals have good judgment. I hope that our friends at Pertamina are not prejudiced. Every renewal brings benefits. Whoever is appointed, we have to trust his or her judgment.'€

Sudirman said he expected the new leaders to be able to '€œdisengage from political agendas'€.

'€œIn previous years, the election of Pertamina'€™s directors became a political battle. Because of the political agenda, the company is often burdened with political interests. But now there will be no meddling,'€ he said.

Pertamina is currently listed at 123rd in the 500 biggest firms in the world by Fortune magazine. The company has also attempted to expand overseas by acquiring a number of oil and gas blocks.

However, the company has a number of challenges ahead, particularly regarding its attempts to increase oil production in domestic oil and gas blocks. It is also under the spotlight for its management of its subsidiary handling imports of oil and petroleum products, Pertamina Energy Trading Limited (Petral). Petral has been accused of being an instrument of shady practices in the oil and gas sector.

Pri Agung Rakhmanto, the director of energy think-tank Reforminer Institute, said the appointment of Dwi indicated the new government'€™s commitment to appointing professionals from outside the energy sector to manage the government'€™s oil and gas interests.

Prior to Dwi'€™s appointment, the government chose Amien Sunar-yadi, a former vice chairman of the Corruption Eradication Commission (KPK), to lead the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas). Recently, outspoken economist Fasial Basri was appointed as the head of a new oil and gas management reform team.

'€œIf we are talking about fixing the oil and gas sector, we are talking about technical things, meaning we need people who have vision and who understand the sector,'€ Pri Agung said.

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