Indonesia
In Indonesia, commodity trading occurs through Pertamina, the sole SOE in Indonesia’s oil and gas sector. Other contractors are likewise authorised under their Production Sharing Contracts (PSCs) with SKK Migas, the oil and gas regulator, to sell commodities on behalf of the government. Pertamina’s downstream activities include oil and gas refining and managing the distribution and marketing of the refined products. PSC holders deliver the government’s share in oil lifting and Domestic Market Obligation (DMO) to Pertamina’s domestic refineries. Pertamina then transfers payments to the treasury.
On 1 January 2015, Pertamina started conducting its import and sales (export) activity of crude oil and refined products through the Integrated Supply Chain (ISC). The procurement and sales are done either through direct negotiation or closed tender to business partners that are registered with Pertamina. ISC is also in charge of selling crude oil from Pertamina’s upstream entitlements. These activities are regulated by SKK Migas which controls Pertamina’s operations.
Indonesia’s latest EITI Report describes in general terms how trading is conducted. However, in view of the relevance of commodity trading in Indonesia’s oil and gas sector, Indonesia has agreed on the following objectives for its participation in the targeted effort on commodity trading transparency:
- Understand the entire value chain from production to trading and evaluate gaps in policies;
- Gain comprehension regarding factors influencing domestic oil pricing, in particular, how the Indonesia Crude Price (ICP) is determined, and provide recommendations to government policies related to pricing;
- Understand Pertamina-ISC’s tendering processes, i.e., how it evaluates applications from traders, and to see how the new system under ISC compares with the system under Petral;
- Complement ISC’s efforts in making their operations transparent; and
- Address negative allegations against Pertamina and provide an opportunity to rebuild their reputation as an SOE.
The commodity trading report is expected in August 2017.