Foreign firms eye local gasoline retailing business

Ika Krismantari, The Jakarta Post, Jakarta

A unit of a U.S-based energy company, PT Chevron Pacific Indonesia (CPI), is set to open gas stations in Indonesia following the footsteps of other foreign firms, including Malaysia's Petronas and Dutch company Shell, an official says.

Erie Soedarmo, director for downstream business at the Energy and Mineral Resources Ministry, told The Jakarta Post over the weekend that the government has issued a temporary license for the Riau-based company to operate gas stations.

"They only have to submit a list of real investments they are going to make to get a permanent license," Erie said.

Chevron Pacific's corporate communication manager, Ratna Novanti, confirmed this when contacted by the Post, adding that the company was conducting a study to test the project's feasibility.

"We are not yet able to reveal the number of gas stations to be built or their locations, as our study has not been yet completed," Ratna said.

Erie said the government did not set a deadline for the company to apply for a permanent license.

In another step toward creating a competitive gasoline market in the country, France-based Total E&P also planned to open five gas stations in Greater Jakarta this year selling high-quality fuels.

These plans will intensify competition in gasoline retailing in Indonesia, with Total and Chevron going head-to-head with the three existing players in the market, state oil and gas firm Pertamina, Shell Indonesia -- the local arm of Royal Dutch Shell -- and Malaysian state oil and gas firm Petroliam Nasional Berhad -- Petronas.

After revoking the monopoly held by state oil and gas firm Pertamina over Indonesia's gasoline retailing industry, the government allowed foreign and local companies to enter the market in December 2005.

However, Pertamina still has a monopoly over the sale of subsidized fuels.

Pertamina and its agents currently operate around 3,000 gas stations throughout Indonesia, while Shell, the first foreign company to enter the gasoline retailing market here, now has four gas stations.

Petronas planned to open 21 gas stations in Jakarta and its surrounding areas, including Bogor, Tangerang and Bekasi this year to add to its existing two gas stations located in Cibubur, East Jakarta, and Bekasi.

The Malaysian firm was optimistic that by the first quarter of 2011, it would have 200 gas stations operating across Java, Sumatra, Kalimantan and some areas of eastern Indonesia, with overall investments expected to come to $200 million.

All gas stations operated by foreign companies retail brands of high-octane gasoline equal to Pertamina's Pertamax and Pertamax Plus.

Indonesia, with a population of some 220 million people, represented an attractive market for gas retailers, as vehicle consumption accounted for almost half of the national consumption of oil, which stands at some 60 million kiloliters per year.