Pertamina: Amidst Global Challenges, Pertamina Successfully Saves IDR 6 Trillion

Amidst the rising global oil prices, which impacted increasing fuel production, PT Pertamina (Persero) carries out various efficiency programs. Until July 2022, Pertamina has saved around IDR 6 trillion on operational cost.

President Director of PT Pertamina (Persero), Nicke Widyawati, said that the success is associated with the cost-saving measures taken by the Pertamina Group since 2015.

Furthermore, Nicke stated that the conflict between Russia and Ukraine had disrupted the world’s energy supply chain, placing energy companies in a challenging scenario as post-pandemic supply recovery moves along with a constrained supply.

The Government’s policy of maintaining people’s purchasing power through fuel subsidies is the right step. Thus, it succeeded in restoring the economy seen from fuel consumption activities increase for the community and businesses. On the other hand, fuel consumption increased has enlarged government subsidies burden.

“We understand the heavy burden of the Government’s subsidy, for that Pertamina carries out various cost-saving programs to help reduce the Government’s subsidy burden,” said Nicke.

In production, the largest portion is the purchasing of crude oil cost, reaching 92% Cost of Production. The investment in upgrading the Pertamina Oil Refinery, carried out in the last four years, has increased the crude oil flexibility. It means if the Pertamina refinery has only been processing certain crude oil, which is expensive. Then starting last year, it could process crude oil with a higher sulfur content from many sources and is cheaper. It is Pertamina’s strategic step that has succeeded in significantly reducing fuel production costs.

In addition, energy efficiency throughout the downstream sector also provides significant cost savings while contributing to carbon emissions reduction.

“A significant post-restructuring breakthrough to achieve Pertamina Group efficiency is the centralization of the procurement of goods and services, as well as the integration and optimization of all assets from upstream to downstream,” she wrote.

Not only saving costs, but Pertamina Group has also increased revenue by exporting high value-added products, such as HVO (palm-based D100) and Low Sulfur Fuel Oil. World demand for low-carbon products continues to rise. With the refinery improvements, Pertamina could produce these products, thus seizing this a very prospective opportunity.

“For us to do everything at a low cost is not just cutting costs, but changing operating models and improving business processes, so that the program continues to be implemented and targets are achieved, but at a higher cost. Pertamina will continue to make efforts to cost, which is also capable of carbon emissions, thus supporting the Pertamina and Indonesia energy transition,” Nicke concluded.