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Spire's six most recent media appearances.

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Is it the end for Petronas in Indonesia

8 – 14 November 2012
Bloomberg Businessweek

Is it the end for Petronas in Indonesia

The petroleum industry in Indonesia is no longer monopolized by Pertamina, the state-owned oil and natural gas corporation. Several foreign companies are entering this lucrative market, forcing 15 of 19 Petronas gas stations in Jabodetabek and Medan to end their operations. Would this spell opportunity for Pertamina?

The opening of the Cibubur Petronas gas station in East Jakarta in early March 2006 was regarded as a milestone and signified Petronas’ commitment to the Indonesian market. Petronas offered a variety of fuel products and various lubricants products, as well as a convenience mini-market that was claimed to have provided better services than those in Pertamina gas stations.

Initially, Petronas had a target to build 200 gas stations in Indonesia by the end of 2010. However, this vision has not materialized. Instead the company has suddenly closed 15 Petronas gas stations in Jabodetabek and Medan (North Sumatra).

BPH Migas shared that Petronas’ distribution line from its storage to the gas station was too far and long; incurring high costs in its operations. Moreover, the industry is also becoming increasingly competitive. According to a study by BPH Migas, a gas station would achieve sustainability if it was able to sell 15,000 liters per day. On a corporate scale, the company would succeed if it had at least 20 gas stations. Spire opined that the foreign players in the industry may reach economic critical mass with 50 gas stations.

On the other hand, Shell Indonesia had become more aggressive. With 65 gas stations in place, it had planned to build 70 units of Shell Motor Express next year – a specially designed gas station concept to serve more than 80 million motorcycle riders.

A Pertamina spokesperson shared that there was no concrete decision yet as to whether Pertamina would be taking over the Petronas gas stations that had ceased operations.

Jeffrey Bahar, Deputy CEO of Spire Research and Consulting, shared that Pertamina should improve on Petronas’ level of services if they were going to take over the latter’s gas stations.

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