The company paid around US$10 billion for imported crude oil, gasoline and liquefied petroleum gas (LPG) in the first half of this year, more than half of last year’s total figure of US$16.2 billion.

Meanwhile, it has estimated that imports of crude oil and LPG this year will reach 155.39 million barrels and 5 million tons, respectively, each of which would amount to a 16 percent annual increase.

“Crude imports amount to around 400,000 barrels of oil per day [bopd],” Pertamina finance director Arief Budiman said on Monday evening. “So, if the crude price stands at $50 per barrel, we need to pay around $20 million per day for the imports.”

The burden is set to get heavier as it will likely also need to import 36 million barrels of RON 92 gasoline for its Pertamax product and 62 million barrels of RON 88 gasoline for its Premium product.

This would see imports of RON 92 gasoline increase by 44 percent compared to last year, while imports of the RON 88 type would drop by 15.8 percent, in line with people’s growing appetite for higher quality fuel.

Indonesia’s crude oil production is expected to decrease by 1.6 percent annually over the next five years, while domestic consumption is projected to grow by 3 percent every year.

Last year, ready-to-sell oil production — locally known as lifting — barely met the target of 820,000 bopd, with only 500,000 bopd of it refined domestically. As a result, Pertamina had to import around 40 percent of the crude oil needed to meet national demand, or around 350,000 bopd.

On the other hand, LPG production only reached 2.1 million tons last year, 31.6 percent of national demand.

The upward trend in imports comes in the wake of Pertamina’s mounting financial burdens. In the first quarter of 2017, Pertamina booked around $900 million in net profit. However, at the same time, it also recorded a negative operating cash flow of $800 million.

As of last year, the government still owed Pertamina Rp 22 trillion in subsidies for the sale of subsidized 3-kilogram LPG canisters and subsidized diesel. At the same time, the government has yet to pay Rp 8.4 trillion for gasoline supplied by Pertamina to the Indonesian Military (TNI) since 2014.

The government plans to repay its debt from TNI’s gasoline consumption by allocating it in the revised 2017 state budget, while the reimbursement for LPG and solar subsidies is set to be allocated in next year’s budget.

“However, we can also repay it in installments this year, depending on our cash flow [in the second half],” the Finance Ministry’s director general for the budget, Askolani, told reporters earlier this month.

The government is also considering allowing Pertamina to readjust its accounting method to ease the company’s burden stemming from its various refinery development projects.

That problem has driven Pertamina to push back the target for completing the Cilacap refinery upgrade it will jointly conduct with Saudi Arabian oil giant Saudi Aramco and the new Tuban refinery with Russia’s Rosneft Oil Company.

Deputy Energy and Mineral Resources Minister Arcandra Tahar stated that Pertamina’s financial condition was a consequence of the country’s Interpretation on Financial Accounting Standard (ISAK) No. 8, which forces the firm to record an off-take agreement as a liability in its financial statement.

“Because Pertamina has been made the sole off-taker for oil produced at the [Cilacap and Tuban] refineries, all debts from these projects are consolidated to Pertamina alone, resulting in an increase in its debt covenant,” he said.

Hence, Arcandra further said, the proposed idea was to exempt Pertamina from the ISAK No. 8.

Popular

Indonesia one step from Olympics after beating South Korea

Opposition weakens as rivals pledge support for Prabowo

Golden generation