Pertamina under increased parliamentary scrutiny

Indonesia's state-owned PT Pertamina has come under increased parliamentary scrutiny for further alleged irregularities in its importation of foreign oil products.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Oct. 20 -- Indonesia's state-owned PT Pertamina has come under increased parliamentary scrutiny for further alleged irregularities in its importation of foreign oil products.

"The inquiry committee has found some other irregularities concerning Pertamina's other crude and fuel imports," said legislator Zulkfili Hassan, who heads the House of Representatives committee charged with investigating management of the country's oil and gas industry.

"The committee findings cannot be published to the public, but we will definitely report them to law enforcers," said Zulkifli, who added that his committee would summon Pertamina officials for further questioning on Oct. 23.

As police continue investigating Pertamina over earlier allegations that it imported a sub-standard oil type called Zatapi last year, one industry observer agreed with Zulkifli in thinking that that case may be just one of many against the firm.

Pri Agung Rakhmanto, executive director of the Reforminer Institute said it was quite possible other such incidences had occurred because "Pertamina has more than 50 partners for importing crude and fuel products."

Pri Agung noted that, "only five of them repeatedly win the import tenders" and that "it's very possible that a case like Zatapi also occurred in other import deals."

In particular, Pri Agung noted that PT Gold Manor International, Singapore, which won a Pertamina-sponsored tender to provide 600,000 bbl of Zatapi crude oil to Indonesia, is one of the few companies that consistently wins oil supply tenders.

Gold Manor won the tender to supply Zatapi crude in December 2007, and began shipping the oil to a refinery in Cilacap, Central Java, in February.

However, legislators of the House of Representatives Commission VII overseeing energy and mineral resources revealed that Gold Manor's proposal to compete in the tender was incomplete as it did not include a detailed breakdown of the contents of Zatapi oil.

The Attorney General Office began investigating the case on Mar. 2, and police last month named four Pertamina staff members, including a vice president and a former director, as suspects in the case.

Pertamina president director Ari Soemarno has repeatedly denied there have been irregularities in the makeup of imported Zatapi crude and that the imports have not caused state losses.

"In fact, Pertamina benefits from the lower price of Zatapi. We saved $5.5 on each barrel of Zatapi we imported. Thus, in total, we saved $3 million on 600,000 bbl of Zatapi oil," Ari said.

In July, the Indonesia's Supreme Audit Agency (BPK) began an investigative audit of fuel imports by Pertamina and its subsidiary, Singapore based Petral, a week after experts hinted at irregularities in the imports.

The audit, which has a particular aim, began two days ago at Pertamina to look at the procurement (of crude oil and fuel products)," BPK auditor Widodo H. Mumpuni said on July 24.

At the time, lawmakers said that although Pertamina had 42 brokers for crude imports and 50 for fuel products imports, only 5-7 brokers regularly won tenders for procurement.

Contact Eric Watkins at hippalus@yahoo.com.

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