State-owned oil and gas firm PT Pertamina (Persero) succeeded in achieving cost optimization of US$2.21 billion in 2021 amid high global crude oil prices.
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| Pertamina. gas station ANTARA/HO – PT. Pertamina Patra Niaga Regional Kalimantan. |
“Through this business strategy, in 2021, Pertamina succeeded in cost optimization of US$2.21 billion, obtained from the cost savings program (cost-saving) of US$1.36 billion, cost avoidance of US$356 million, and additional revenue (revenue growth) of around US$495 million,” director of finance of Pertamina, Emma Sri Martini, said in Jakarta on Tuesday.
Martini explained that Pertamina has developed several policies and business strategies from the financial and operational perspective to face the increasing global oil price challenges.
Pertamina is strengthening its financial strategy and operational efforts to improve efficiency across business lines, both holdings and sub-holdings and from upstream processing to downstream, amid increasing crude oil prices.
From a financial perspective, Pertamina has implemented a cost optimization program across the Pertamina Group, including cost savings, cost avoidance, and increased revenue.
Under the savings efforts, Pertamina is also running a hedging program for market risk management. In addition, the company has centralized procurement, prioritized capital expenditures, and is managing assets and liabilities to reduce costs or interest expenses (cost of funds).
“We are trying to optimize all costs and manage the company’s financial aspects, to reduce costs, including prioritizing projects that have fast results,” she said.
Besides financial tightening, Pertamina is also implementing an operational strategy to increase revenue for its six sub-holdings.
In the upstream business, Pertamina has continued to increase oil and gas production and lifting to take advantage of the increasing oil prices. As a result, production has increased by 4 percent and lifting by 3 percent.
The positive performance from upstream operations has been contributed by Rokan Block and foreign assets and consistent efforts to maintain production levels through well-drilling and resource discovery.
In 2021, Pertamina drilled 12 exploration wells and 350 exploitation wells. In the same year, its discovered reserves (2C) reached 486.70 MMBOE (million barrels of oil equivalent) and additional proven reserves (P1) reached 623.47 MMBOE.
In processing and petrochemicals, in 2021, Pertamina implemented a crude and product optimization strategy. This contributed to an increase in product yield value by around 3 percent.
The strategy is related to the selection and economic substitution of crude oil and maximizing high valuable products with high spreads. In 2021, refinery production also increased in response to higher energy demand due to national economic recovery.
Then, in the transportation and logistics sectors, Pertamina optimized the load factor to achieve revenue and cost-efficiency. In the gas business, Pertamina also increased the gas trade volume and transportation, as well as oil transportation volume.
“And after the legal end state, we will also intensify resource sharing, such as sharing facilities and development agreements, especially in upstream sub-holding,” Martini said.
She added that the positive performance downstream was also supported by the government through the recognition of the difference in compensation for HJE JBT Solar and JBKP Pertalite in 2021, which reached around US$4 billion or equivalent to Rp58.6 trillion (excluding tax) and around US$1.7 billion or equivalent to Rp24.1 trillion (excluding tax) in 2018 and 2019.
According to Martini, the government’s support will continue in 2022 through a policy revision that will stipulate Pertalite (RON90) as a Special Assignment Fuel in place of Premium (RON88) and an adjustment to the price of Pertamax.
As Pertamina’s appreciation for this support, several initiatives in the downstream sector have been implemented that simultaneously respond to market changes, such as an expansion of digital transactions, acceleration of Pertashop outlets to capture larger market opportunities in rural areas, and diversion of gas station energy sources to solar panels.
We appreciate the government and the DPR’s decision, which has increased the budget ceiling for subsidies and compensation for 2022 to maintain and protect people’s purchasing power and contain potential inflation. This is a support for Pertamina in providing energy amidst the challenges of high crude oil prices,” Martini said.
With this support, in 2022, Pertamina will make efforts to increase oil and gas production by 17 percent, targeting 79.9 percent Valuable Product Yield, adding around 3 thousand Pertashop fuel outlets, developing digital markets for up to 25 million MyPertamina users, and increasing revenue from non-captive markets in the shipping business to 7.5 percent.
To strengthen its commitment to low-carbon energy, it will produce 7,138 GWh of electricity, which will be supported by a targeted increase in the installed capacity of up to 2.9 GW. Another important strategy will be unlocking the value developed by subsidiaries.
“In the financial sector, we will focus on optimizing costs targeted to reach up to US$600 million. We will continue to communicate with the government to ensure a good decision for the company,” Martini said.Jakarta (ANTARA) – State-owned oil and gas firm PT Pertamina (Persero) succeeded in achieving cost optimization of US$2.21 billion in 2021 amid high global crude oil prices.
“Through this business strategy, in 2021, Pertamina succeeded in cost optimization of US$2.21 billion, obtained from the cost savings program (cost-saving) of US$1.36 billion, cost avoidance of US$356 million, and additional revenue (revenue growth) of around US$495 million,” director of finance of Pertamina, Emma Sri Martini, said in Jakarta on Tuesday.
Martini explained that Pertamina has developed several policies and business strategies from the financial and operational perspective to face the increasing global oil price challenges.
Pertamina is strengthening its financial strategy and operational efforts to improve efficiency across business lines, both holdings and sub-holdings and from upstream processing to downstream, amid increasing crude oil prices.
From a financial perspective, Pertamina has implemented a cost optimization program across the Pertamina Group, including cost savings, cost avoidance, and increased revenue.
Under the savings efforts, Pertamina is also running a hedging program for market risk management. In addition, the company has centralized procurement, prioritized capital expenditures, and is managing assets and liabilities to reduce costs or interest expenses (cost of funds).
“We are trying to optimize all costs and manage the company’s financial aspects, to reduce costs, including prioritizing projects that have fast results,” she said.
Besides financial tightening, Pertamina is also implementing an operational strategy to increase revenue for its six sub-holdings.
In the upstream business, Pertamina has continued to increase oil and gas production and lifting to take advantage of the increasing oil prices. As a result, production has increased by 4 percent and lifting by 3 percent.
The positive performance from upstream operations has been contributed by Rokan Block and foreign assets and consistent efforts to maintain production levels through well-drilling and resource discovery.
In 2021, Pertamina drilled 12 exploration wells and 350 exploitation wells. In the same year, its discovered reserves (2C) reached 486.70 MMBOE (million barrels of oil equivalent) and additional proven reserves (P1) reached 623.47 MMBOE.
In processing and petrochemicals, in 2021, Pertamina implemented a crude and product optimization strategy. This contributed to an increase in product yield value by around 3 percent.
The strategy is related to the selection and economic substitution of crude oil and maximizing high valuable products with high spreads. In 2021, refinery production also increased in response to higher energy demand due to national economic recovery.
Then, in the transportation and logistics sectors, Pertamina optimized the load factor to achieve revenue and cost-efficiency. In the gas business, Pertamina also increased the gas trade volume and transportation, as well as oil transportation volume.
“And after the legal end state, we will also intensify resource sharing, such as sharing facilities and development agreements, especially in upstream sub-holding,” Martini said.
She added that the positive performance downstream was also supported by the government through the recognition of the difference in compensation for HJE JBT Solar and JBKP Pertalite in 2021, which reached around US$4 billion or equivalent to Rp58.6 trillion (excluding tax) and around US$1.7 billion or equivalent to Rp24.1 trillion (excluding tax) in 2018 and 2019.
According to Martini, the government’s support will continue in 2022 through a policy revision that will stipulate Pertalite (RON90) as a Special Assignment Fuel in place of Premium (RON88) and an adjustment to the price of Pertamax.
As Pertamina’s appreciation for this support, several initiatives in the downstream sector have been implemented that simultaneously respond to market changes, such as an expansion of digital transactions, acceleration of Pertashop outlets to capture larger market opportunities in rural areas, and diversion of gas station energy sources to solar panels.
We appreciate the government and the DPR’s decision, which has increased the budget ceiling for subsidies and compensation for 2022 to maintain and protect people’s purchasing power and contain potential inflation. This is a support for Pertamina in providing energy amidst the challenges of high crude oil prices,” Martini said.
With this support, in 2022, Pertamina will make efforts to increase oil and gas production by 17 percent, targeting 79.9 percent Valuable Product Yield, adding around 3 thousand Pertashop fuel outlets, developing digital markets for up to 25 million MyPertamina users, and increasing revenue from non-captive markets in the shipping business to 7.5 percent.
To strengthen its commitment to low-carbon energy, it will produce 7,138 GWh of electricity, which will be supported by a targeted increase in the installed capacity of up to 2.9 GW. Another important strategy will be unlocking the value developed by subsidiaries.
“In the financial sector, we will focus on optimizing costs targeted to reach up to US$600 million. We will continue to communicate with the government to ensure a good decision for the company,” Martini said.
Contact: Fajriyah Usman, VP Corporate Communications, PT Pertamina (Persero)
M: +62 858 8330 8686, Email: fajriyah.usman@pertamina.com, URL: https://www.pertamina.com
Written by: Azis Kurmala, Editor: Suharto (c) ANTARA 2022
Topic: Press release summary