Pertamina

Pertamina

Infobox_Company
company_name = PERTAMINA
company_| company_type = Government-owned corporation
foundation = 10 December 1957
location = flagicon|Indonesia Jakarta, Indonesia
key_people = Ari Hernanto Soemarno
industry = Oil and Gas
slogan = Always there
homepage = [http://www.pertamina.com www.pertamina.com]

Pertamina ("Perusahaan Tambang Minyak Negara", lit. 'State Oil Company') is an Indonesian government-owned corporation which extracts and refines the country's oil and gas reserves. It was created in August 1968 by the merger of "Pertamin" (established 1961) and "Permina" (established 1957).

History

Nationalization

In 1957, Dutch assets in petroleum were nationalized, from which Permina was founded as a state-owned oil monopoly, headed by Lieutenant-General Ibnu Sutowo. [Vickers (2005), p. 185.] Ibnu Sutowo's position as the second deputy of Abdul Haris Nasution was the beginning of the army's involvement in the oil industry. [Ricklefs, "A History of Modern Indonesia Since c. 1300", 2nd ed., Stanford: Stanford University Press, 1994, p. 262.] Permina distributed oil for the entire archipelago.

Permina founded the Apprentice Technical School ("Sekolah Kader Teknik") in Brandan to train and produce experts in the field. To meet this goal Permina established the Oil Academy in Bandung at 1962. Oil Academy's curriculum pertains to the technical aspects of the oil industry, and the graduates turned into the main forces in Pertamin (which later transformed to Pertamina).

In 1960, the Congress enacted a policy that the mining of Indonesian oil and ground gases are only permitted for the state, through a state-administered company. Pertamin, established in 1961, was responsible for the administration, management and controlling of the exploration and production. The policy was short lived. An agreement between the state and foreign companies was affirmed that gradually, oil refinement manufactures and other assets in marketing and distribution were to be sold to Indonesia within five to fifteen years.

In 1968, to consolidate oil and gas industry for its management, exploration, marketing and distribution, Permina and Pertamin merged and became PN. Pertamina. It continued to do little drilling itself, but made production-sharing agreements with foreign companies.

The 1970s

After the merge, Pertamina's production rose considerably (about 15% each in 1968 and 1969, and nearly 20% in 1973). [Ricklefs, 296] By the end of 1973, it directly produced 28.2% of Indonesia's oil, with agreements of Caltex and Stanvac to produce the rest (67.8% and 3.6%, respectively). Its assets included seven refineries, oil terminals, 116 tankers, 102 other vessels and an airline. It was also active in cement, fertilizer, liquid natural gas, steel, hospitals, real estate, a rice estate, and telecommunications.

The 1974 oil price increases produced revenues of $4.2 billion in that year, equivalent to approximately one sixth of Indonesia's gross domestic product. Much of this revenue was used by Sutowo to expand Pertamina's interests far beyond oil production to include investments in oil tankers, steel and construction. [Schwarz (1994), p. 55] Pertamina built the Bina Graha, the presidential executive office building in Jakarta.Ricklefs, 301] . The global oil crisis of the 1970s greatly increased oil prices and profits. Pertamina initially provided a fiscal lift to the hopes of Indonesia's development planners.

For President Suharto and other members of the ruling elite, revenue from Pertamina "an ongoing source of funding" without accountability: "they ran this cash-cow into the ground, using it for both military and personal ends." [Vickers, Adrian. 2005. "A History of Modern Indonesia," Cambridge: University of Cambridge Press, p. 185.] Historian Adrian Vickers describes the endemic corruption at Pertamina:

At each stage of the transaction chain somebeody was getting a percentage... If accidents occurred, as in 1972 when eighty impoverished people died... they could be covered up. [Vickers, Adrian. 2005. "A History of Modern Indonesia," Cambridge: University of Cambridge Press, p. 187.]
In 1973, the government's ability to borrow money from overseas was constrained, and Pertamina was no longer providing revenues to the state. Instead, the massive enterprise turned out not to be making money, but compiling exponentially large losses. In February 1975, Pertamina could no longer pay its American and Canadian creditors. An investigation followed, which revealed over US$10 billion in debts, mismanagement, and corruption within the company. This debt was equivalent to approximately thirty percent of Indonesia's GNP at the time.cite book |last=Schwarz |first=A. |year=1994 |title=A Nation in Waiting: Indonesia in the 1990s |publisher=Westview Press |isbn=1-86373-635-2] . Others offer a figure of a $15 billion debt. [cf., Vickers, Adrian. 2005. "A History of Modern Indonesia," Cambridge: University of Cambridge Press, p. 185.] A public investigation hurt the reputation of the national elite both among Indonesians and foreigners. The man most responsible for the collapse, Ibnu Sutowo, was never punished. He and his family were among the richest and most powerful in Indonesia, into the 21st century. [Vickers, Adrian. 2005. "A History of Modern Indonesia," Cambridge: University of Cambridge Press, p. 185.] The government took over the operation of the company and sought means by which to repay its debts. Pertamina's debt problems were eventually solved through a large government bail-out, which nearly doubled Indonesia's foreign debt.

ince the 1980s

In the 1980s, major partnerships with American and French firms produced vast quantities of petroleum. Caltex, a joint Chevron-Texaco company, and Total S.A. were some of the largest foreign players. [Weissman, Robert. 1990. "Rich Land, Poor People: The Economics of Indonesian Economic Development." "The Multinational Monitor," October 1990 - Vol 11(no. 10).]

Human rights observers have long expressed concern about Indonesia's hostility to labor unions. Wrote the "Multinational Monitor:" "In 1985, the government ordered the firing of over 1,600 workers at Pertamina and foreign oil companies, charging that they had been members of the Indonesian Communist Party, which was banned 19 years earlier when Suharto took power." [Weissman 1990]

In 2003 Pertamina legally transformed to be PT. Pertamina (Persero), as per the enactment of Government Regulation No.31/2003. Pertamina is now under the coordinator of the State Minister of State-owned Enterprises.

Like other contractors, as a business player Pertamina also holds Cooperation Contract to Oil and Gas Regulatory Body. With its transformation into a limited liability company, Pertamina has become a privatized business entity motivated solely by the profit motive.

Facilities and products

Currently Pertamina owns seven oil refineries which have a capacity of 1,041.2 thousand barrels, two gas reserves with a capacity of 31 tons per year, and a petrochemical company. Pertamina's products include a great variety of fuels, chemicals, additives, and retail products.

Notes

External links

* [http://www.pertamina.com Official website]


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