Powered-Up Pertamina to Be World-Class by 2023: CEO

Jakarta Globe, S.K. Zainuddin, June 13, 2011

'Mergers and acquisitions are the best options to increase
our production and reserves,' Pertamina chief executive Karen
Agustiawan told the Jakarta Globe on the sidelines of the East
Asia World Economic Forum on Sunday.

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The Jakarta Globe spoke with Pertamina chief executive Karen Agustiawan on Sunday on the sidelines of the World Economic Forum in Jakarta and asked her about Indonesia’s future energy needs and the state oil and gas firm’s role in meeting them.

What is your vision for the firm for the next 20 years?

We want to be a world-class national oil company by 2023 — meaning being respected by oil companies, having a major role in the global energy business and becoming one of 15 best oil companies in the world.

How do you intend to achieve those goals?

There is much to be done. First, we have to increase operational objectives. Our strategy in increasing upstream production is focusing on domestic operations, aggressive international expansion and improving our capability through strategic alliances.

Our focus is on domestic operations. Some of our [oil] fields are mature. It is natural that production at mature fields declines, so we will use sophisticated technology, such as secondary recovery alternative methods to retrieve oil such as water or gas flooding.

Mergers and acquisitions are the best options to increase our production and reserves.

We will invest in production and exploration in undeveloped areas with production capabilities. These assets can either be in the country or abroad.

In terms of downstream production, we must have competitive refineries and we must be able to lead in the domestic retail market, expanding it as well.

Second, we must have a competitive advantage in all business areas and high health and safety standards.

Third, we are also improving our capabilities and promoting a competitive working culture for our employees. We also have to fulfill the expectations of our shareholders.

How will you encourage a shift to green energy?

At Pertamina, we are always trying to use more efficient and environmentally friendly technologies. For example, we are in the process of investing direct-current electric drills to replace the existing, high energy-consumption mechanical drills.

We support various policies and programs that have been implemented and are being developed by the government.

These include the use of liquefied petroleum gas for households and compressed natural gas for transportation, as well as coal and gas for electricity. We also support the increasing use of new and renewable low-polluting energy sources.

We also aim to focus on supplying geothermal energy as an alternative for traditional power sources. For this plan, Pertamina will continue to develop the country’s geothermal reserves. Currently, the installed capacity is only around 4 percent of the country’s geothermal potential.

Is nuclear energy a viable option in order to meet the nation’s energy needs?

We have options. Indonesia’s national energy policy focuses on diversifying its energy resources.

By 2025, the target energy mix should be 33 percent coal, gas and coal-bed methane at 30 percent, oil at 20 percent and renewable energy — including geothermal energy, biofuel and solar power — at 17 percent.

My opinion is that we have to optimize the sources of energy that we have, which is why Pertamina focuses more on alternatives such as geothermal and coal-bed methane.

What is your forecast for Indonesia's energy sector during the next five years?

Southeast Asia’s regional energy security framework has been promoted as one strategic element of the Master Plan on Asean Connectivity adopted in 2010.

In line with the master plan, President Susilo Bambang Yudhoyono recently launched the Indonesian Economic Development Expansion and Acceleration Master Plan 2011-15. The plan aims to establish six economic corridors, each with specific competitive advantages.

The plan aims to help Indonesia become one of the world’s 10 largest economies by 2030 through inclusive, sustainable and high economic growth.

One of the plan’s objectives is to improve energy security for households, industries, and transportation through energy diversification, energy conservation, energy prices and green policies.

Various programs to be developed by the government are to provide LPG for households, CNG and LPG for cars and increase the use of new and renewable low-polluting energy sources.

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