State-Owned Enterprises Minister Dahlan Iskan said on Monday that Pertamina would reap enormous net profits by taking over the operation of the gas-rich block from its current operator, France-based Total E&P Indonesie. “Assuming the Mahakam operations would be a quick way for Pertamina to become equal to or perhaps even larger than [Malaysia’s] Petronas in terms of revenue,” he said in a statement.
Dahlan’s comments were made amid the current uncertainty over the future of the Mahakam block, which Total operates and holds 50 percent participating interest, with the remaining interest belonging to Japan’s Inpex. The Indonesian government has yet to decide whether to grant an extension to Total for the Mahakam block or to hand it over to Pertamina instead.
Dahlan said that Pertamina had become the most bankable state-owned company at the end of 2012 by reaping record-high net profits of Rp 25.89 trillion (US$2.67 billion), up 18.4 percent from a year earlier.
However, he said, Pertamina was still far behind its Malaysian rival, Petronas, which, according to Dahlan, reaped around Rp 160 trillion last year.
Malaysia’s local media have reported that Petronas, named among the world’s 25 largest petroleum companies with an average daily oil output of 1.4 million barrels per day (bpd), booked RM 59.1 billion ($19 billion or Rp 185 trillion) last year, a 14 percent year-on-year decline.
“Indonesia has already outperformed Malaysia in the palm oil sector and our flag carrier, Garuda Indonesia, has surpassed Malaysia Airlines. However, we have yet to find a way for Pertamina to do the same,” said Dahlan.
“Pertamina CEO Karen Agustiawan told me that if Pertamina did take over Mahakam, then in 2018, the company would collect at least Rp 171 trillion,” he said.
Dahlan’s firm support for Pertamina differs from that of other ministers, such as Energy and Mineral Resources Minister Jero Wacik.
Speaking in February before lawmakers on the House of Representatives’ Commission VII overseeing energy, Jero said that while Pertamina would indeed be involved in Mahakam’s future operations, the government would maintain its partnership with Total.
The minister likened the bond between Indonesia and Total to the relationship between married couples saying, “If the current ‘husband’ suits the ‘wife’, why should the ‘wife’ look for someone else?”
Similarly, Coordinating Economic Minister Hatta Rajasa said in February that while “ideally” Pertamina would obtain a majority participating interest in Mahakam under the new contract, the government was still undecided over Total’s future involvement with the block.
The fate of the Mahakam block has been one of the most anticipated concessions out of the 29 due to expire between 2013 and 2021.
A source who spoke to The Jakarta Post under the condition of anonymity said that both Pertamina and Total had signed an agreement for both firms to jointly operate the Mahakam block for five years after 2017, after which Pertamina would take over full operations.