Friday, March 30, 2007

Pertamina versus Chevron

No, this is not about fight next big fight for Indonesian oil field.

I recently finished reading a book entitled "Collapes" by Jareed Diamond about how societies choose to fail or to succeed which according to him is is its relationship with nature. As Professor of Geography at UCLA and winner of Pulitzer Prize as well as National Medal of Science he know very well how to combine long historical vew with eye-opening analysis and captivating prose.

In the book, he recorded his visit to Pertamina site in Salawati Island, Papua and Chevron oil field in Kutubu, Papua New Guinea. This is a snipped on the first "From a long distance, the field's location could be recognized by a flame shooting out of a high tower, where natural gas obtained as a by-product of oil extraction was being burned off, there being nothing else to do with it (facilities to liquefy and transport it for sale were lacking). There are numerous oil spill on the ground. I encountered only three species of large fruit pigeons, of which 14 have been recorded elsewhere on Salawati. A Pertanima employee described to me the location of two pigeons breeding colonies, where he said that he hunted them with his shotgon..." (page 442-3).

This is his take on the second, "I look out the airplane windows for some signs of the oil field infrastructure that I expected to see lookin gup. I became increasingly puzzled still to see only uninterrupted expanse of rainforest...On the flight in, firearms or hunting equipment of any sort are forbidden, on the flight out; animals or plants of their feathers or parts that might be smuggled... New Guineas has many birds and mammal species whose presence and abundance are sensitive indicators of human disturbance... I discover to my astonishment that these species are much more numerous inside the Chvron area than enywhere else that I have visited on the island of New Guinea expecet for a few remote uninhabites areas... In effect, the Kutubu oil field functions as by far the largest and most rigourously controlled national park in Papua New Guinea" (page 444-6).

What are the probable explanations? I quoted in full:

"There are several differences between Pertamina's situation as a national oil company in Indonesia in 1986, and Chevron's situation as international company operation in Papua New Guinea in 1998, that may account for the differing outcomes. The Indonesian public, government, and judiciary are less interested in, and expect less from, the behaviour of oil companies than do their European and American counterparts encompassing Chevron's major costumers. Pertamina's Indonesian employees have had less exposure to enviromental concerns than have Chevron's Amrican and Australian employees.

Papua New Guinea is a democracy whose citizen enjoy the freedom to obstruct developmental projects, but Indonesia in 1986 was a military dictatorship whose citizens enjoyed no such freedom. Beyond that, the Indonesian government was dominated by people from its most populous islands (Java), looked on its New Guinea province as a source of income and a place to resettle Java's surplus population, and was less concerned with the opinions of New Guineans than is the government of Papua New Guinea, which owns the eastern hald of the same islands. Pertamina did not face rising environmental standards from Indonesian overnment, such as those that international oil company face. Pertamina is largely a national oil company within Indonesia, competing for fewer overseas contracts than do the big international companies, so that Pertamina does not derive an international competitive advantage from clean enviromental policies." (page 451-2)

Two questions come to my mind. Why Pertamina has not become an international oil company competing for overseas contracts (like say, Petronas Malaysia)? Second, how far have we really improve since 1986?


Anonymous said...

its sad to say & admit that Indonesia has made the 'wrong' decisions in the past to enhance its own future welfare... on the other hand, Malaysia has done otherwise... in accordance to the Petronas & Pertamina tale, there is also another tale in which us Indonesians should learn from...
in 1980, the Indonesian government (because of the oil boom) had a choice of whether to fund an aeroplane factory (IPTN) or a semi-conductor factory... at the same time, Malaysia was playing a waiting game on us because they were also about to invest heavily on a semi-conductor factory (back then, we were way ahead of them in terms of technology & human resources)... hence, because of the Habibie factor, we chose aeroplanes over semi-conductors... 20 years later, IPTN is nearly (if, not) bankrupt & Malaysia is the 2nd largest manufacturer of semi-conductors in the world...
from these 2 'tales' it seems we've gone nowhere but backwards, but then again mistakes are there to be corrected NOT regretted... from an optimistic point of view, let's not hope Pertamina ends up like IPTN & let's hope that the generations ahead don't make the same mistake twice...


anymatters said...

It seems there's a competition in this context. Because, all oil projects in Indonesia are under Pertamina's contract: TAC, PSC or EOR. Pertamina can't compete with the contractors, vice versa. The contractors compete with each other. However, there's a bargain in contract.

anymatters said...

sorry, i mean "it seems there's no competition..."

Berly said...

My line of reseach does not touch mining contracts and revenue sharing agreement. So you need to enlightened me on this. Isn't Pertamina compete with Exxon in Cepu for instance?
The main point in the the book that I'd like to highlihght is the impact of such domestic-centre-attitude of Pertamina to environment. Taking the contradiction, if only Pertamina expanded globally it would be good not only for Pertamina but also for Indonesia's environment.

I totally agree that we keep lagging behind our neighbour. In early 1970 Indonesia has a good start but now even Vietnam is close to (if not already) catching up. Bad policies wre made but we can make new and better policies in the future. Let us begin and we will never walk alone.

ade said...

Pertamina does compete internationally. It wins few (small?) contracts abroad. Don't ever think to compare it with Exxon or BP, even with Petronas. Because chaos system inside it is too chronic, can't go far more. Sadly..