Pertamina:The Giant of Indonesia’s Energy Sector and Its Challenges

Company Overview: PT Pertamina (Persero)

As a state-owned entity, Pertamina is committed to maintaining Indonesia’s energy security and self-sufficiency while pivoting toward “New and Renewable Energy” (NRE).

• Company Name: PT Pertamina (Persero)

• Founded: December 10, 1957

• Headquarters: Jakarta, Republic of Indonesia

The History and Legacy of Pertamina

The origins of Pertamina are deeply intertwined with Indonesia’s post-independence development.

• The Early Days (1950s): The government established PT Eksploitasi Tambang Minyak Sumatera Utara to manage oil fields in Sumatra. In 1957, this became PERMINA, led by Lieutenant General Ibnu Sutowo, who oversaw Indonesia’s first oil exports in 1958.

• Consolidation (1968): To improve efficiency, PERMINA merged with PN Pertamin to form PN Pertambangan Minyak dan Gas Bumi Negara (Pertamina).

• Monopoly Era (1971): Law No. 8 of 1971 granted Pertamina exclusive rights over the exploration, production, refining, and sale of oil and gas in Indonesia.

• Modernization (2003): The company transitioned into a “Persero” (limited liability company), aiming for more transparent and efficient corporate management.

Core Business Sectors

Pertamina operates through a “Sub-holding” structure to manage its diverse operations:

Upstream (Exploration & Production)

Under PT Pertamina Hulu Energi, the company manages oil and gas fields both domestically and internationally to ensure a stable energy supply.

Downstream (Refining & Petrochemicals)

Pertamina operates six major refineries and manages over 5,407 gas stations. Through PT Kilang Pertamina Internasional, they also produce a wide range of petrochemical products.

Gas and Infrastructure

PT Pertamina Gas Negara (PGN) handles natural gas distribution and LNG infrastructure, including strategic collaborations with international partners like Tokyo Gas.

Renewable Energy & Power

Through PT Pertamina Power Indonesia, the company aims to develop 10.2 GW of renewable energy by 2026. Notable projects include Biomass Carbon Capture and Storage (BECCS) in partnership with Marubeni.

Integrated Marine Logistics

PT Pertamina International Shipping manages the transport of energy products. They are currently working with NYK Line (Japan) to explore liquid CO2 and LNG transport for a decarbonized future.

Key Historical Milestones

• 1957: Foundation of PERMINA.

• 1975: A major financial crisis where the company faced $10 billion in debt, leading to government intervention.

• 2003: Incorporation as a “Persero.”

• 2020: Implementation of the Sub-holding corporate structure.

• 2024: Commencement of CO2 injection tests at the Sukowati field (East Java) in collaboration with JOGMEC and JAPEX.

Challenges and Controversy: The Shadow of Corruption

Despite its critical role, Pertamina has been plagued by several high-profile issues:

• 1970s Financial Crisis: Rapid diversification led to massive debt.

• 2012 Tanker Sale Dispute: Lack of transparency in the sale of tankers led to parliamentary inquiries.

• 2025 Mega-Corruption Scandal: In February 2025, a massive corruption case was uncovered involving executives from PT Pertamina Patra Niaga and PT Pertamina International Shipping. The scandal, involving fuel imports and quality manipulation between 2018–2023, reportedly cost the state 193.7 trillion IDR (approx. $12 billion), making it one of the largest corruption cases in Indonesian history.

Public Perception in Indonesia

For the average Indonesian, Pertamina is an essential part of daily life. While recent environmental initiatives and renewable energy developments receive praise, the recurring corruption scandals have fueled public demand for greater transparency and reform within state-owned enterprises.

Conclusion

Pertamina remains the heart of Indonesia’s energy landscape. Its journey from a post-independence oil manager to a global energy player is marked by both grand achievements and significant scandals. As Indonesia moves toward a greener future, Pertamina’s ability to innovate while cleaning up its corporate governance will be the key to its long-term success.

Glossary of Terms

• Upstream: Exploration and production of crude oil and natural gas.

• Downstream: Refining and selling the final products (gasoline, chemicals).

• LNG (Liquefied Natural Gas): Gas cooled to liquid form for easier transport.

• Renewable Energy: Sustainable energy from sources like solar, wind, and biomass.

• Holding Company: A parent company that manages a group of subsidiary companies.

FAQ

Q: Why was Pertamina established?

A: To centralize the management of Indonesia’s oil and gas resources and ensure national energy security.

Q: What is Pertamina’s goal for renewable energy?

A: They aim to develop over 10 GW of renewable energy by 2026 and significantly reduce CO2 emissions by 2030.

Q: How did the 2025 corruption scandal affect the company?

A: It highlighted deep-seated issues in the procurement process, leading to massive financial losses and a call for urgent structural reforms.

Expand Your Business in Indonesia with Timedoor

Celebrating our 10th anniversary, Timedoor is your trusted partner for navigating the Indonesian market. We provide comprehensive support to help your business thrive:

• System Development: Cutting-edge IT solutions tailored to your needs.

• IT Education: Building digital literacy and professional skills.

• Japanese Language & Human Resources: Training and placement services for global talent.

• Market Entry Support: Expert consulting for international companies entering Indonesia.

Contact us here