something to read whilst we wait

Photo/Dhana Kencana)


Indonesia’s state-owned oil and gas firm Pertamina will suspend operations at its new Tempino-Plaju pipeline in Sumatra just one week after its opening amid reports that rampant oil theft has already cost the company Rp 17.5 billion ($1.7 million) in losses.

“We will suspend operations until all of the illegal refineries stop operating,” Pertamina president director Karen Agustiawan said in Jakarta on Monday. “It may take up to six months.”

Oil theft targeting the old Tempino-Plaju pipeline has been a problem since 2008 and has cost Pertamina hundreds of billions of rupiah in losses. Last year alone, illegal tapping of the pipeline cost the company Rp 500 billion.

Thieves drill holes in the pipeline and affix a faucet to divert the oil. The practice is extremely dangerous, and last October eight people died in after an illegal refinery exploded in the South Sumatra district of Musi Banyuasin.

The new pipeline, spanning 260 kilometers and worth $90 million, was expected to curb oil theft because unlike its predecessor, it has a stronger structure and is buried 1.5-2 meters underground.

Oil thieves, however, still found a way to siphon oil from the pipeline. From July 7 to July 23, Pertamina lost 17,500 barrels of oil, equal to Rp 17.5 billion.

From January 1 to July 23, the company lost a total of Rp 280 billion from due to illegal tapping.

Oil and gas regulator SKKMigas has blamed weak law enforcement for failing to curb the widespread practice.

Karen on Monday said Pertamina was currently coordinating with the Indonesian Military (TNI) in order to tackle the issue.

Pertamina processing director Chrisna Damayanto, meanwhile, said suspending operations should not disrupt production at the Plaju refinery, as the pipeline only supplied between 10 and 15 percent of crude oil for the refinery.

“To replace 70,000 barrels [channeled through the pipeline], we will ship [crude oil] from other regions,” Chrisna added.