State-owned energy giant Pertamina has enlisted fellow state-owned company Krakatau Steel to supply metal sheet coils for the former’s project in the Rokan oil and gas block in Riau.
Pertamina, through subsidiary Pertamina Gas (Pertagas), signed on Tuesday a deal with Krakatau Steel, the country’s largest steelmaker, to purchase 53,600 metric tons of hot rolled coil (HRC) steel, which will be turned into 370 kilometers of piping for the project.
Pertagas president director Wiko Migantoro said the deal was a means of using more locally made components within the Rokan Block, which is Indonesia’s second-most productive oil block.
“This is mainly an effort to create synergy among state-owned enterprises and their subsidiaries in key national projects,” he said in a joint statement, adding that the deal would cut pipe purchasing costs by 16 percent.
Indonesia, through Pertamina, is set to nationalize the Rokan Block next year. The area is currently operated by United States-based Chevron.
The country expects Pertamina’s takeover to maintain block production levels, which saw a landmark decline of 9.2 percent year-on-year to 190,131 barrels per day in 2019. Prior to 2019, the Rokan Block was Indonesia’s most productive oil block.
“We guarantee punctuality on the lead time of 4-6 months, so that this project can be finished on time and with quality,” said Krakatau Steel president director Silmy Karim.
