Nicke said in a hearing with the House of Representatives Commission:
- At the current price amid geopolitical situation, we see an opportunity to buy from Russia at a good price
Nicke said:
- Pertamina talked with the Ministry of Foreign Affairs and Bank Indonesia to discuss the Russian oil purchase.
- For this matter, there is no problem politically as long as the companies we deal with are not subject to [Western] sanctions
- Pertamina would conduct the purchase purely on a business-to-business basis
- The company plans to process the Russian crude oil at the Balongan refinery
Currently, the Balongan refinery can only accept low-sulfur crude oil such as that produced by Saudi Aramco.
The price of this oil is relatively high, and the supply is limited.
With this revamping, one of which is completed in May 2022, Balongan is more flexible to use any type of crude.
Should the plan go through, Indonesia could follow India's and China's footsteps by snapping up cheap Russian oil to cope with soaring global energy prices.
Pertamina has been desperate to cut its crude oil cost to balance its book.
That was despite the fact that global oil price has risen 74 %.
The government was supposed to compensate Pertamina for the price cap - a policy to maintain the people's purchasing power during the pandemic.
But, so far, the government had been late in paying Pertamina.
The government sets a certain level for the oil price to calculate the state budget, and any deviation from the assumption would affect its ability to spend.
Indonesia expects the crude oil price to average at $63 per barrel in its calculation for this year's state budget.
