PT Pertamina recorded a net profit of US$660 million in the first half of this year - Photo: The Company.

JAKARTA (TheInsiderStories) – Indonesia’ state oil and gas firm PT Pertamina recorded a net profit of US$660 million in the first half (1H) of this year, the company said on Monday (08/26). The figure increased significantly around 112 percent when compared to the previous period of $311 million.

Pertamina Finance Director Pahala Mansury explained, the increase was mainly triggered by a decrease in the cost of goods sold by 6 percent compared to the same period last year. This reduction in expenses was partly driven by the average Indonesian Crude Price (ICP) in the 1H of this year.

“The average ICP in the 1H last year is around $66 per barrel, while in 1H of this year around $63 per barrel. In addition to having an impact on reducing the cost of raw materials, at the same time it does have an effect on reducing revenue. But because it is combined with other operational cost efficiencies, costs can be reduced even more,” he said.

This also includes a decline in crude oil imports as a result of the increased absorption of domestic crude oil. As of the end of July 2019, the total crude oil and condensate purchase agreements from domestic cooperation contract contractors reached 123.6 mbcd.

Thus, margins have also improved in the range of 14 percent for gross profit margin and 8 percent for operating profit margin. This improved performance was also reflected in the net cash flow from operating activities that was getting stronger at $1.57 billion, an increase of 2-fold from the 1H position last year, which was $756 million. So that despite an increase in investment activity and loan repayments, cash-on-hand was maintained at $7.38 billion, better than the same period last year.

In terms of upstream operational performance, it said, Pertamina’s crude oil production continues to be increased to 413 thousand barrels of oil per day (bopd), higher than the previous year which was 385 bopd.

In the context of energy independence and the availability of high-quality energy, the foremost achievement of a strategic project that was successfully completed was the Cilacap Langit Langit Project. The $392 million projects have operated and delivered quality fuel in Indonesia equivalent to EURO 4 with a total capacity increase of 1.6 million barrels per month.

In addition, the increase in sales volume of fuel oil in the 1H this year reached 34.1 million kiloliters (kl). This achievement was higher than in the same period in the previous year of 33.9 million kl. Meanwhile, sales of non-fuel products also increased from the previous period of 7.9 million kl to 8.3 million kl. Even since May 2019, Avtur and Solar have no need to be imported because they can already be met from Pertamina’s refinery production.

Mansury added that besides recording an improved financial performance, Pertamina also achieved a number of significant achievements during the first half of this year, including positive progress in the development of oil and gas infrastructure projects. Pertamina’s entry into the Fortune Global 500 list, which is ranked 175th, also proves Pertamina’s current high achievements.

This ranking jumped 78 ranks compared to the previous year which was ranked 253. Another noteworthy achievement was Pertamina’s success in implementing the so-called – One Price BBM Program- at 154 points, which is getting closer to the target set by the Government, which is 160 points until the end of 2019.

Weeks ago, the company also said its crude oil imports in 1H fell 35 percent to 220,000 barrel per day (bpd), compared to 339,000 bpd in 2018. The lower imports were due to increasing domestic purchases from other oil contractors in Indonesia.

Until August 2, 2019, Pertamina agreed to buy 123,600 bpd of crude oil from 39 oil contractors operating in Indonesia. The totals agreement for the purchase of crude oil and condensate from domestic increased greatly significant compared to 2018, the company said.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com