Indonesia to Import Crude Oil from Russia

BONIFASIUS JOSIE SUSILO HARDIANTO

A view shows railroad freight cars, including oil tanks, in Omsk, Russia May 1, 2020. Picture taken May 1, 2020.

Pertamina plans to import crude oil from Russian and the company has coordinated with the Foreign Ministry and Bank Indonesia to carry out the plan.

JAKARTA, KOMPAS — Indonesia remains committed to international regulations amid unilateral sanctions by the United States and its allies against Russia. Thus, Indonesia is still free to establish economic cooperation and other activities with other countries in accordance with its national strategic interests.

“Indonesia has so far only carried out sanctions regulated by the United Nations Security Council. Indonesia has never followed the call to carry out sanctions imposed unilaterally by certain parties," said Foreign Ministry spokesman Teuku Faizasyah when answering questions raised by journalists during a press briefing in Jakarta on Thursday (31/3/2022).

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In line with that, Faizasyah said, the government would not prohibit any parties in Indonesia to do business with Russia. As long as the business deals were considered profitable for both parties, the government would not prohibit it.

"It's B-to-B [business-to-business] relations," he said.

This statement was made in response to Pertamina's plan to import Russian crude oil as unveiled by the president director of state-owned Pertamina, Nicke Widyawati, during a hearing with the House of Representatives Commission VI in Jakarta on Monday (28/3).

"At a time when prices are [high] and with the ongoing geopolitical situation, we see an opportunity to buy from Russia at a good price," said Nicke.

The refinery, which is currently being upgraded, is expected to be able to resume operation in May.

As part of the import plan, Pertamina had conducted a negotiation with the seller, she said. According to the plan, crude oil from Russia will be processed at the Balongan Oil Refinery in Indramayu, West Java. If the crude oil can be processed without any problem, Pertamina will continue to import from Russia. The refinery, which is currently being upgraded, is expected to be able to resume operation in May.

"We have coordinated with the Foreign Ministry and Bank Indonesia on this matter. Politically there is no problem as long as the companies we deal with are not sanctioned. For payments, we will cooperate with other parties, maybe through India or something," said Nicke.

Foreign Minister Retno LP Marsudi held a bilateral talk with Russian Foreign Minister Sergey Lavrov on the sidelines of the meeting of neighboring countries of Afghanistan held in Anhui, China, on 30-31

KOMPAS/WISNU WIDIANTORO

Minister of Foreign Affairs (Menlu) Retno LP MArsudi (right) and Russian Foreign Minister Sergey Lavrov exchange texts after signing the cooperation document at the Pancasila Building, Ministry of Foreign Affairs, Jakarta, Wednesday (9/8/2017).

March. It was not yet known whether the planned import of oil from Russia was also discussed by Retno and her counterpart.

In an online press conference with journalists in Jakarta on Thursday (31/3), Retno did not mention this matter. During the press briefing, she said she only conveyed the government’s aspiration to Lavrov about the need to stop the war immediately.

Sanction

Following the Russian invasion of Ukraine, which began on 24 Feb. 2022, the US and its allies imposed sanctions on Russia in various forms. For example, a ban on imports of Russian oil into the domestic territory of each country. However, they are considered unilateral sanctions that are imposed outside the UN mechanism. So, there is no obligation for other UN member states to follow suit.

However, the US and its allies put pressure on countries that continue to cooperate with Russia. Ironically, several US allies continue to do business with Russia. Some European countries, for example, continue to buy oil and gas from Russia.

Currently, world oil prices remain above US$100 per barrel. Bloomberg reported that Russia offered oil at a price of $25 below the market price.

India and China also continue to buy oil from Russia, which has so far supplied 10 percent of the global oil needs. A number of China’s state-owned and private oil companies are still negotiating to also import oil from Russia.

A number of oil tankers containing 6 million barrels of Russian oil are scheduled to arrive in India in April.

India’s oil companies such as Hindustan Petroleum, Indian Oil Corp and Nayara Energy had agreed to buy a total of 26.8 million barrels for the period of May 2022. A number of oil tankers containing 6 million barrels of Russian oil are scheduled to arrive in India in April.

Moscow and New Delhi were reported to be using SPFS, a transaction processing system that has been used by Russia's central bank since 2014. The US and its allies have cut off a number of Russian banks from the main international payment system Swift, a notification and transaction processing system in international finance.

SUMBER: PERTAMINA EP

One of the offshore oil drilling platforms operated by PT Pertamina EP, a subsidiary of PT Pertamina (Persero).

ReforMiner Institute executive director Komaidi Notonegoro supported Pertamina's plan to buy crude oil from Russia, saying that the plan was important to strengthen national energy security. As long as the deal benefited both the buyer and seller, other parties could not intervene.

"If a country does not want Indonesia to buy from Russia, is that country is willing to offer a replacement supply of oil at a lower price?" asked Komaidi further.

However, he pointed out that Indonesia should be able to provide reasonable arguments for those who questioned the import plan.

A similar opinion was conveyed by the executive director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal. However, he pointed out that Indonesia should be able to provide reasonable arguments for those who questioned the import plan.

Based on Pertamina data, the company’s existing stocks for diesel amount to 1.9 million kiloliters, which is sufficient for 23.27 days. For Pertalite, the available stocks amount to 1.15 million kiloliters, enough for 15.7 days; for Pertamax, about 927,137 kiloliters, enough for 25.99 days; and Pertamina Dex, about 29,212 kiloliters, enough for 23.41 days. (AFP/RAZ/MED/VIO/ITA)

(This article was translated by Hendarsyah Tarmizi)