T

he government'€™s troubled oil-trading company, Pertamina Energy Trading Ltd. (Petral), can continue its operation as a business entity but should no longer be allowed to handle tenders for the procurement and sale of crude oil and petroleum products for the company'€™s parent company Pertamina, the reform team for oil and gas governance said in a recommendation announced on Tuesday.

Faisal Basri, the head of the team '€” which was formed last month and is tasked particularly with assessing oil and gas business practices to root out so-called mafia practices, said tenders for the sale and purchase of crude oil and petroleum products should be implemented directly by Pertamina'€™s integrated supply chain (ISC) unit.

Meanwhile, under the team'€™s recommendation, Petral could be a participant in procurement tenders held by ISC.

'€œIn the future, the function of trading, which is the initial function of Petral, will remain necessary because demand for oil will continue to grow above production. Therefore, we recommend maintaining Petral and encouraging it to become a world-class national oil trading company,'€ Faisal said.

'€œMeanwhile, the procurement of crude oil and petroleum products should be performed in Indonesia by ISC so that [the process] is a full subject of Indonesian law. Under this method, auditors and law enforcers can also perform their function optimally,'€ Faisal said.

Petral'€™s status has recently been under the spotlight as the firm is accused of being an instrument of cartel-like operations in the oil and gas sector, in which rent seekers benefit. The government earlier said that it would dismiss Petral should assessment find the company did not benefit the country.

Energy and Mineral Resources Minister Sudirman Said said he had received the team'€™s recommendations and discussed the matter with Pertamina.

'€œRegarding the recommendations, Pertamina will soon execute them because they are in line with the fundamental improvement plans for Petral and ISC that have been decided by Pertamina'€™s directors,'€ Sudirman said.

The team was formed to assess the country'€™s oil and gas operations and expected to produce recommendations regarding several crucial issues in the oil and gas sector for stakeholders as well as for the President.

The recommendations are needed to address systemic problems that had so far seriously affected outcomes in the sector, including the existence of the oil and gas mafia.