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Jakarta Post

New regulation requires all crude to be offered to Pertamina

  • Stefanno Reinard Sulaiman

    The Jakarta Post

Jakarta   /   Mon, September 10, 2018   /   02:48 pm
New regulation requires all crude to be offered to Pertamina Energy and Mineral Resources Minister Ignasius Jonan (Antara/Akbar Nugroho Gumay)

As part of its measures to reduce fuel imports, the government last Thursday issued a ministerial regulation that requires private oil companies to offer all crude oil to state energy holding company Pertamina.

The new regulation projects a daily purchase of 225,000 barrels of oil for Pertamina.

Energy and Mineral Resources Ministerial Regulation No. 42/2018 on utilizing crude for domestic needs also requires Pertamina to prioritize local crude production instead of importing crude oil.

The regulation applies to all private oil companies, including the local subsidiaries of a foreign parent companies.

Regulation No. 42/2018 also rules that all sales and purchase negotiations between Pertamina and private oil companies must be held under a business-to-business (B2B) scheme and once the negotiation is complete, Pertamina may establish a 12-month contract with the oil companies.

However, the regulation does not provide a stipulation in the event of a failure in negotiations between Pertamina and the oil firms.

When asked recently about such a possibility, Energy and Mineral Resources Minister Ignasius Jonan said that the regulation was sufficient for reducing oil imports, and that the government would step in if a problem emerged.

“We will look at what has caused the transaction to fail. We could look at the history of crude oil transactions in the market,” he said.

The new regulation is part of the government's efforts to reduce the current account deficit, which is currently at 3 percent of gross domestic product. (bbn)