Nationalization In 1957,
Royal Dutch/Shell's assets in Indonesia (trading as
Bataafse Petroleum Maatschappij) were nationalised, from which
Permina was founded as a state-owned oil monopoly, headed by Lieutenant-General
Ibnu Sutowo. Sutowo's position as the second deputy of
Abdul Haris Nasution was the beginning of the armed forces' involvement in the oil industry. Permina distributed oil for the entire archipelago. Permina founded the Apprentice Technical School (
Sekolah Kader Teknik) in
Brandan to train and produce experts in the field. In 1962, the company went on to establish the Oil Academy in
Bandung. The academy's curriculum covered the technical aspects of the petroleum industry, and the graduates became the main source of labor for Permina (which was renamed Pertamin in 1961). In 1960, the
Provisional People's Consultative Assembly adopted a policy that oil and gas extraction could only be carried out by the state, through a state-administered company. Pertamin was responsible for the administration, management and controlling of the exploration and production. The policy was short-lived. An agreement between the state and foreign companies was affirmed that gradually,
oil refinery manufactures and other assets in marketing and distribution were to be sold to Indonesia within five to fifteen years. In 1968, to consolidate the oil and gas industry for its management, exploration, marketing and distribution, Permina and Pertamin merged and became PN. Pertamina. It continued to do little drilling itself but made production-sharing agreements with foreign companies.
The 1970s After the merger, Pertamina's production rose considerably (about 15% each in 1968 and 1969, and nearly 20% in 1973). By the end of 1973, it produced 28.2% of Indonesia's oil, with agreements of
Caltex and
Stanvac to produce the rest (67.8% and 3.6%, respectively). Its assets included seven
refineries,
oil terminals, 116
tankers, 102 other vessels and an airline. It was also active in
cement,
fertiliser,
liquid natural gas,
steel,
hospitals,
real estate, a
rice estate, and
telecommunications. The 1974 oil price increases produced revenues of USD 4.2 billion in that year, equivalent to approximately one-sixth of Indonesia's gross domestic product. Much of this revenue was used by Sutowo to expand Pertamina's interests far beyond oil production to include investments in oil tankers, steel and construction. Pertamina built the Bina Graha, the presidential executive office building in
Jakarta. The global oil crisis of the 1970s greatly increased oil prices and thus Pertamina's profits. The company initially provided a fiscal lift to the hopes of
Indonesia's development planners. For President
Suharto and other members of the ruling elite, revenue from Pertamina was "an ongoing source of funding" without accountability. "They ran this cash-cow into the ground, using it for both military and personal ends." Historian
Adrian Vickers describes the endemic corruption at Pertamina: "At each stage of the transaction chain, somebody was getting a percentage... If accidents occurred, as in 1972 when eighty impoverished people died... they could be covered up." of Pertamina used for transport of employees and equipment during the 1970s In 1973, the government's ability to borrow money from overseas was constrained, and Pertamina was no longer providing revenues to the state. Instead, the massive enterprise turned out not to be making money but accumulating losses. In February 1975, Pertamina could no longer pay its American and Canadian creditors. An investigation followed, which revealed over
US$10 billion in debt, mismanagement, and corruption within the company. This debt was equivalent to approximately thirty per cent of Indonesia's
GNP at the time. Others offer a figure of a $15 billion debt. A public investigation damaged the reputation of the national elite both among Indonesians and foreigners. However, charges against
Ibnu Sutowo were dismissed and he and his family remained among the richest and most powerful in Indonesia, well into the 21st century. To execute a clause in the 2001 Oil and Natural Gas Act, in 2003 Pertamina legally became PT PERTAMINA (Persero), as per the enactment of Government Regulation No.31/2003. Pertamina is now under the coordinator of the State Minister of State-owned Enterprises. Like other contractors, Pertamina holds a Cooperation Contract with the Oil and Gas Regulatory Body. With its transformation into a
limited company, Pertamina has become a business entity with the main target of making a profit.
2024 Pertamina LNG graft scandal In June 2024,
Karen Agustiawan, Pertamina's president director from 2009 to 2014, was sentenced by the Jakarta Corruption Court to nine years in prison for
graft, surrounding the procurement of
liquefied natural gas (LNG) from
Cheniere Energy. News agency
Antara estimates the that purchase contract resulted in state losses of Rp1.7 trillion (US$113.84 million). Other executives, including Yenni Andayani and Hari Karyuliarto, are also implicated and under investigation for their involvement in decisions that led to substantial financial losses. Luhur Budi Djatmiko, another former executive, faces scrutiny related to a separate corruption case involving a land purchase in South Jakarta that caused the state a loss of Rp348 billion. The suspects include Riva Siahaan, CEO of
Pertamina Patra Niaga; Yoki Firnandi, CEO of
Pertamina International Shipping; and Sani Dinar Saifuddin, Director at
Kilang Pertamina Internasional. Prosecutors claimed that the three executives bypassed a regulation requiring Pertamina to prioritize local crude oil purchases, instead opting for costly imports. In response, the suspects justified these actions by asserting that domestic crude did not meet refinery specifications, despite evidence proving otherwise. Additionally, Pertamina International Shipping allegedly exaggerated crude oil transportation costs, marked up to 13%-15%, profiting
Muhammad Kerry Andrianto Riza, one of the suspects from private sector. Oil trader
Mohammad Riza Chalid, Muhammad Kerry's father, had his house in
South Jakarta raided by prosecutors as part of the case investigation, even though he was not yet named as a suspect. Investigations also uncovered that Pertamina Patra Niaga
adulterated subsidized Pertalite RON 90 gasoline with the higher-quality Pertamax RON 92 and sold it at an inflated price, On 25 February, member of
House of Representatives (DPR) Eko Hendro Purnomo stated that the DPR will summon
Minister of State Owned Enterprise Erick Thohir without providing any details on the date. Erick Thohir himself was too busy taking care of
PSSI since he still was available to make comments on the Indonesian national team under 23 and under 20. On 26 February, interviewed by
Tempo,
Universitas Gadjah Mada law professor M. Fatahillah Akbar stated that Pertamina consumers could take class action law suits against Pertamina both under criminal and civil law at the same time. ==President directors==