Indonesia’s state-owned Pertamina is seeking government approval to reduce its stakes in some upstream assets, which will help it to cope with rising oil prices and a softening national currency.
The firm wants to avoid shouldering too much risk in one asset class, which should help maintain its long-term financial condition, Reuters quoted vice president of corporate communication Adiatma Sarjito as saying.
“Like the saying ‘don’t put [all] your eggs in one basket,’ we [plan to] minimise risk based on business and legal studies,” he said.
He did not reveal the assets Pertamina intended to sell or to what time schedule it was working but said the firm would maintain a controlling interest in the projects.
As a net oil importer, higher crude prices have placed greater pressure on its finances. The government has approved Pertamina’s proposal to “take steps” to protect itself from rising oil prices, Deputy State Owned Enterprise Minister Fajar Harry Sampurno has said.
A letter was sent from his ministry to Pertamina’s management approving the strategy to reduce the firm’s interests in some upstream projects, he said. The letter also reportedly gave the green light for a planned spin-off of the company’s Cilacap and Balikpapan refineries to its subsidiaries, as well as a review of company policies that impact its finances.
In 2017, the government dismissed former Pertamina president Dwi Soetjipto along with his deputy, Ahmad Bambang. The reason for their removal was reportedly leadership issues and poor teamwork. The two leaders had communication problems, local reports said at the time, noting that these could have put the energy firm’s future in jeopardy.
While Pertamina’s assets grew by 8% year on year in 2017 to reach US$51.2 billion, according to its audited earnings report, its profit slid by 19% to US$2.5 billion.
The Jakarta government is trying to boost energy supplies and attract upstream investment. Indonesia’s crude oil lifting amounted to 771,000 bpd in the six months to June 30, below a full-year target of 800,000 bpd. Lifting refers to production that is ready for shipping and differs from total production.
The Southeast Asian country’s crude production has fallen steadily since a peak of around 1.7 million bpd in the mid-1990s and the country has been a net oil importer for more than a decade.