A Pertamina gas station in Kuningan, Jakarta. (Antara Photo/Andika Wahyu)

Petral Names Veteran Employee as New CEO in Latest Overhaul Effort

BY :RANGGA PRAKOSO

JANUARY 21, 2015

Jakarta. Indonesia’s state-owned energy company Pertamina picked a veteran employee to replace Bambang Irianto as chief executive of its Hong Kong-incorporated fuel trading arm Pertamina Energy Trading, or Petral, as part of an overhaul of the firm.

Toto Nugroho, who has been working at the company for more than two decades, was named as the new head of Petral.

“He knows about Petral in detail,” Pertamina’s new chief Dwi Soetjipto, said on Tuesday, adding that Toto had served in the integrated supply chain, giving him sufficient knowledge and experience to successfully run Petral. Pertamina has not given a reason for Bambang’s dismissal.

Dwi said Toto has a good track record and he will officially lead Pertamina’s oil trading arm from Jan. 26.

Since taking office last October, President Joko Widodo has imposed major changes on the energy sector, including the dismissal of Pertamina’s board and an investigation into Petral to weed out what he calls the country’s “oil mafia” that influences the trading of oil products to its advantage.

Pertamina has repositioned Petral as a true global oil trader, so that it may begin distributing oil internationally as well as domestically, Dwi said.

Petral’s main duties were to facilitate oil imports for Indonesia, but a recent probe conducted by Joko’s new energy reform team uncovered a slew of discrepancies in its operations.

Among them is the unit’s practice of adding the highly flammable mixture naphtha into its RON92 fuel supply to lower its octane to that of a RON88 product.

Most international oil and gas companies no longer supply the RON88 grade of gasoline, known as Premium. Its scarcity has spurred the Indonesian government to gradually reduce imports of the product, and place pressure on Pertamina to boost production of RON92 gasoline, or Pertamax.

Investigators from the oil and gas governance reform team of the Energy and Mineral Resources Ministry also found that Petral had been using Thailand’s state-controlled energy company, PTT, as a proxy in its procurement of oil from Azerbaijan. That raised questions as to why the Pertamina unit did not go through official channels, namely SOCAR Trading, an Azerbaijan oil firm, for its purchases.

Joko’s administration first move to clean up Pertamina came in November after Dwi, a former president director at state-controlled cement maker Semen Indonesia, was picked to helm the company.

Following Dwi’s appointment, the government dismissed eight members of Pertamina’s board of directors.

Investor confidence in Indonesia, Southeast Asia’s biggest crude oil producer, reached its lowest point with a series of corruption scandals that led to the indictment of former president Susilo Bambang Yudhoyono’s top oil officials.

Joko and the Corruption Eradication Commission (KPK) have separately issued stern warnings to a so-called “oil and gas mafia” that is said to profit from the industry at the expense of the country’s decaying energy infrastructure and market position.

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