Indonesia: New regulation requires all crude to be offered to Pertamina

  • As part of its measures to reduce fuel imports, the government on 6 Sep 18 issued a ministerial regulation that requires private oil companies to offer all crude oil to state energy holding company Pertamina.
  • The new regulation projects a daily purchase of 225,000 barrels of oil for Pertamina and also requires Pertamina to prioritize local crude production instead of importing crude oil.
  • The regulation applies to all private oil companies, including the local subsidiaries of a foreign parent companies.
  • The regulation decrees that all sales and purchase negotiations between Pertamina and private oil companies must be held under a business-to-business (B2B) scheme and once the negotiation is complete, Pertamina may establish a 12-month contract with the oil companies.
  • However, the regulation does not provide a stipulation in the event of a failure in negotiations between Pertamina and the oil firms.
  • When asked recently about such a possibility, Energy and Mineral Resources Minister Ignasius Jonan said that the regulation was sufficient for reducing oil imports, and that the government would step in if a problem emerged.

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