Tag: Pertamina

Indonesian braces for greater environmental damage as oil slick widens

Indonesian authorities have launched a massive cleanup operation off the coast of Balikpapan, the provincial capital of East Kalimantan, where an oil slick from a ruptured undersea pipeline has sprawled to 20,000 hectares, contaminating mangrove forest and marine life.

Satellite images from state space agency LAPAN showed in just two days since the initial oil slick was detected on Mar. 31, the spill has sprawled to 13,559 hectare on Apr. 2 from 12,987 hectare on the previous day.

According to the Fisheries and Maritime Affairs Ministry, by Apr. 5 the spill has sprawled to 20,000 hectares, Kompas newspaper reported.

“Now it would take months to recover from the environmental damage,” Arifsyah Nasution, a marine campaigner from Greenpeace Indonesia said.

Environmental activists in Balikpapan have team up to collect evidence and assess the environmental damage, which Nasution said the public can later use as a comparison to assessment made by government agencies.

Balikpapan city administration has declared a state of emergency as locals’ livelihoods suffer. The oil spill claimed the lives of five fishermen when it ignited on fire on Mar. 31 and killed at least an Irrawaddy dolphin, a rare and protected species.

State-owned oil company Pertamina, which at first denied the leak was its fault, acknowledged that the spill had come from its undersea pipelines, located 22 to 26 meters below the sea.

“The crude oil leaked from one of the pipelines that was dragged more than 100 meter from its location,” Yudi Nugraha, a spokesman for Pertamina operations in Balikpapan said.

The company said the steel pipelines, which distribute crude oil from the Lawe-Lawe Terminal to its refinery in Balikpapan are 20 years old and that only external forces can dragged them as far as 100 meter.

Greenpeace’s Nasution said the crisis could have been minimized if Pertamina had responded more quickly.

The Energy and Mineral Resources Ministry said the likely culprit is a Panama-flagged coal ship that dropped its anchor in Balikpapan Bay, dragging one of the pipelines and causing it to rupture.

The ministry’s oil and gas director general Djoko Siswanto said ships are not permitted to drop anchor on that part of the bay where the pipelines are installed.

Environmental and Forestry Minister Siti Nurbaya Bakar has dispatched ministry officials to Balikpapan, an oil and mining hub in the island of Borneo, to spearhead the cleanup effort and to assess the adverse impact on the bay’s ecosystem and biodiversity. Pertamina has deployed 15 cleaning vessels.

Siti Nurbaya said the ministry team will measure the length of the coastline impacted by the spill. They found that it has so far polluted 34 hectare mangrove wetlands in Kariangau village and 6,000 mangrove trees in another village.

“We have asked Pertamina to prioritize cleaning the oil slick in waters close to human settlements to get rid of the oil’s nauseating smell and other imminent health hazards,” Siti Nurbaya said.

The team also collected oil booms, or temporary floating barriers, from oil companies operating in the region to contain the oil spill and by late Wednesday, the team has collected up to 70 meter cubic oil slick.

“We are coordinating with the police, which will launch a criminal investigation into the case. The forestry ministry will assist in determining the loss suffered by locals and the compensation for those affected,” Rasio Ridho Sani, forestry ministry’s director general for law enforcement said.

Octavinus, a search and rescue official in Balikpapan said locals began to see oil slick floating on the waters on Mar. 31 midnight and it was sparked on fire before noon, burning two fishing boats.

An operation was immediately dispatched to rescue the fishermen and by Apr. 3,  Octavianus said they found one of the boats completely burned and all bodies of five fishermen killed in the fire.

“A coal barge with 20 crew on board was sailing by but the barge was only slightly damaged and the whole crew is safe,” he said.

The original story was published in Arab News

New Pertamina chief faces one-price fuel policy challenge in a vast archipelago

The newly appointed president director of state-owned energy firm Pertamina, Elia Massa Manik, has a huge task ahead to carry out President Joko Widodo’s one-price fuel policy, in the face of inadequate infrastructure to distribute fuel to the country’s remote areas and far-flung islands in the Indonesian archipelago.

Maryati Abdullah, the national coordinator for PWYP Indonesia, a civil society coalition for energy and extractive industry governance reform, considers the policy is viable if Pertamina could import crude oil at a much more affordable price and refine it in its own refineries.

“They could start by revitalizing its existing, old refineries so they could increase its production output, while also remain committed to developing new ones,” she said.

Unit pengolahan cilacap

Pertamina refinery in Cilacap, Central Java. Photo: Pertamina.com

Widodo announced the policy in October 2016 during a visit to Yahukimo, a district near the Indonesia-Papua New Guinea border in the easternmost province of Papua. Due to the location and lack of infrastructure in Papua and the eastern part of Indonesian archipelago, fuel prices can cost up to a dozen time more from the normal price of 6,450 rupiah per liter for petrol and 5,150 rupiah per liter for solar. The policy is expected to cost Pertamina about 800 billion rupiah annually.

Fahmy Radhi, an economic energy analyst from Universitas Gadjah Mada in Yogyakarta agrees that having its own production infrastructure could give Pertamina wider fuel distribution coverage.

“If it has its own refineries, Pertamina won’t have to import up to 650,000 barrel per day. This is a huge amount that the oil and gas rent seekers have been cavorting around,” Fahmy said.

Kurtubi, a lawmaker from the House of Representatives Commission VII which oversees energy and mineral resources said as a company drawn to constitutional obligation about exploitation of the country’s natural resources should benefit the people, there is more that Pertamina has to consider in its operation than merely making a profit.

Article 33 in Indonesia’s 1945 Constitution states that “sectors of production which are important for the country and affect the life of the people shall be controlled by the state and the land, the waters and the natural riches contained therein shall be controlled by the State and exploited to the greatest prosperity of the people.”

“One-price fuel policy is a constitutional mandate. Pertamina could do it as long as the cost is efficient,” Kurtubi, who goes by one name, said.

“The new president director has to be able to operate the company without contradicting the constitution,” he added.

Kurtubi also said that cutting fuel import should be high in Pertamina’s agenda under Manik’s leadership.

“It should develop its own refineries so that Pertamina could produce its own fuel to meet the domestic demands,” Kurtubi said, adding that the existence of a refinery in a certain area could also create multiplier effects that would boost the local economy and open new jobs.

Manik was appointed to head the company during Pertamina’s general shareholders meeting at the State-Owned Enterprises Ministry in Jakarta on March 16, more than a month after then-chief executive Dwi Soetjipto and deputy director Ahmad Bambang were ousted on Feb 3 because of what the government – its majority shareholder – was a leadership problem and a lack of teamwork.

Manik, who was the president director of PT Perkebunan Nusantara (PTPN) III, the holding company of 14 state plantations firms since April 2016, is an alumnus of Bandung Institute of Technology and Asean Institute Of Management.

In his first address to Pertamina’s employees, Manik said he would focus on strengthening the company’s human resources and maintaining Pertamina’s improved performance for the past years.

Sudirman Said, the then-energy and mineral resources minister, said in 2015 that Pertamina was able to save 250 billion rupiah per day after ousted CEO Dwi in 2015 disbanded Pertamina Energy Trading Limited (Petral), a Singapore-based Pertamina subsidiary handled crude and fuel oil imports for the state energy company and was notorious for being the oil and gas rent seekers’ den.

“There are many important projects we need to execute to achieve the national energy security goal, therefore it is important to gain trust so that we can adeptly carry out the projects,” Manik said.

PWYP Indonesia had urged the government to select the new president director in a transparent, credible and independent manner, following the Feb 3 ouster of Dwi.

Maryati said the government didn’t say much about the reason they appointed Manik, but given his public track record on improving corporate efficiency, she holds a favorable view that Manik would be efficient in his human resources planning and be able to restructure various executive positions to a more effective appointments.

“We also hope he would not be swayed by certain political interests,” Maryati said.