AsianOil: Pertamina’s shipping arm unveils $4bn asset upgrade plan

The shipping arm of Indonesia’s state-owned Pertamina has unveiled plans to invest $4bn to upgrade its vessels and terminals over the next seven years.
Pertamina International Shipping (PIS) intends to replace 23 vessels and expand its fleet, director of business planning Wisnu Medan Santoso told Reuters on June 25.
The executive said the investment would ensure compliance with the latest International Maritime Organisation (IMO) standards, which were introduced on January 1, 2020. The IMO rules require the global tanker fleet to use fuel with a sulphur content of no more than 0.5% – down from the previous cap of 3.5%.
Santoso also said his company was looking to diversify its client base beyond its parent company, whose affiliates account for 95% of the shipping arm’s customers.
“There are many oil and gas players in [the Association of Southeast Asian Nations] ASEAN who do not have their own shipping arm; we see this as an opportunity,” Santoso added. “We have a large captive cargo, we have a large economy of scale. We can utilise that to capture opportunities in ASEAN.”
While Pertamina created PIS in 2016, the shipping company was inaugurated as a sub-holding of the state major in May this year. Commenting at PIS’ inauguration ceremony on May 5, State-Owned Enterprises (SOE) Minister Erick Thohir said the move was PIS’ first big step towards strengthening its position in the energy and marine logistics sectors.
Pertamina president director Nicke Widyawati said at the time that following the inauguration, PIS was officially responsible for managing 750 vessels – of which 540 are owned and the rest leased – as well as six ports and oil product and liquid petroleum gas (LPG) terminals.
The Indonesian government undertook a major restructuring of Pertamina last year, reducing the number of board members from 11 to six as well as merging various subsidiaries into a handful of sub-holdings. Thohir said at the time that the goal was to hold initial public offerings (IPOs) for its sub-holdings within the next couple of years.
“The target is to have one or two sub-holdings to go public within two years. This is part of efforts to improve transparency and their capabilities,” Thohir said. “It’s time for consolidation and efficiencies.”
Commenting on the government’s financing goals, Wisnu said: “Capital expenditure cannot rely on external loans 100%. The method may vary... the important thing is that our plan is firm.”