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Jakarta Post

Sales purchase agreements hamper efforts to reduce oil import: Official

  • News Desk

    The Jakarta Post

Jakarta   /   Wed, August 15, 2018   /   07:15 pm
Sales purchase agreements hamper efforts to reduce oil import: Official Oil's future is not so bright. (Bloomberg/Andrey Rudakov)

Sales purchase agreements between domestic oil contractors and foreign firms may hamper the government’s effort to reduce oil import by requiring state-owned oil and gas holding Pertamina to buy all oil lifting produced by the contractors, an official says.

Previously, President Joko “Jokowi” Widodo told Pertamina to buy all oil lifting, the colloquial term for ready-to-sell production, from the contractors to reduce oil imports in an effort to strengthen the rupiah.

Energy and Mineral Resources Ministry Oil and Gas Director General Djoko Siswanto said on Wednesday that the ministry had sent letters to all private contractors regarding the recent order from the President.

Citing the response from the contractors, Djoko said firstly, some oil contractors had already had sales purchase agreements with foreign firms and secondly, Pertamina had already lost tender in crude oil purchase.

Djoko explained that the possible implementation of Jokowi’s order was that Pertamina would be given priority in any tenders of domestic oil production or it had to wait for expiration of all sales purchase agreements made between the private contractors and foreign buyers.

Total oil lifting is around 775,000 barrels of oil per day (bopd), 550,000 of which is used by Pertamina. Therefore, under the President’s order, Pertamina is required to buy the remaining 220,000 bopd from the contractors.

United States oil giant ExxonMobil vice president public and government affairs Erwin Maryoto said the company was open to do business with any firm, including Pertamina, as long as it was in accordance with the market mechanism. (bbn)