T

he Energy and Mineral Resources Ministry has become embroiled in a blame game with state-owned energy holding company Pertamina, as the ministry named the company as the main contributor to Indonesia’s trade deficit.

Djoko Siswanto, the ministry’s director general for oil and gas, called out Pertamina recently, saying the company “lacked aggression” when it came to exploration activities, resulting in lower national oil production.

“Pertamina’s [oil and gas] production is low because the fields are old. Some have even been in existence since the Dutch [colonial] era. And what is more important is that [Pertamina] lacks aggression in exploration activities,” Djoko said recently.

Statistics Indonesia (BPS) announced last week that the country had recorded a trade deficit of US$1.02 billion in August. On the bright side, this was only half the figure recorded in July, when Indonesian imports exceeded exports by a whopping $2.03 billion, marking the highest deficit in five years.

The August deficit brings the year-to-date trade deficit to $4.1 billion, with surpluses only occurring in March and June so far this year.

BPS data shows that oil and gas was the biggest contributor to the deficit, as imports of the commodities amounted to $3.05 billion, up 14.5 percent from $2.6 billion in July. Meanwhile, oil and gas exports dropped 3.27 percent month-to-month (mtm) to $1.38 billion.

Those figures bring the year-to-date trade deficit in oil and gas to $8.3 billion, far exceeding the $5.4 billion recorded over the same period last year.

National oil demand stands at around 1.3 million barrels of oil per day (bopd), while the target of national oil production is only set at 800,000 bopd.

Djoko called Pertamina “lazy” for preferring to buy oil and gas blocks in other countries instead of carrying out exploration at home.

He cited Petamina’s decision to acquire 10 percent of the shares in Australia-based oil firm ROC Oil Ltd, which operates the Basker Manta Gummy (BMG) field in Australia, in 2009.

The deal cost Pertamina A$66.2 million ($48.2 million), with the assumption of obtaining 812 bopd.

A year later, the oil block was shut down after shareholders decided to halt crude oil production as the field was unprofitable. Pertamina’s production rate at the field was only 252 bopd.

The deal was tainted by alleged graft surrounding the transaction, which reportedly caused
Rp 568 billion ($38.3 million) in state losses.

Djoko further said he would instruct Pertamina to assume control of unsold oil and gas blocks as the government puts seven blocks up for auction, including four onstream blocks.

“I plan to assign Pertamina to closed or unsold blocks. We will draft a regulation if necessary,” he said.

When asked whether Pertamina had the financial capability to realize the plan, Djoko said the company could utilize its firm working commitment (KKP), or exploration, funds, for other blocks. He cited KKP funds for Riau’s Rokan Block, — which Pertamina will take over from PT Chevron Pacific Indonesia, the local subsidiary of Chevron, in 2021 — which amounted to $500 million for a period of five years.

Separately, responding to the government’s criticism, Pertamina upstream director Dharmawan Samsu said the company was in the process of finalizing its exploration plans and formulating a strategy to maintain the production rate of its existing oil and gas blocks.

“We will talk in person with [Djoko] regarding our upstream plans,” he said.

The government has set a lower oil-production target in the draft 2019 state budget compared to this year’s as output from existing oil fields in the country has declined as a result of aging.

The draft budget, currently being deliberated at the House of Representatives, shows oil output or oil lifting at 775,000 bopd, which is 25,000 bopd lower than forecast in the 2018 state budget.

East Kalimantan’s Mahakam Block, operated by Pertamina, is one of the cases of a working area that has a declining production rate of up to 25 percent per year because of its old age. The block has been operating since 1966.