President and CEO Dwi Soetjipto was forced to vacate his position, along with his Deputy President and Deputy CEO Ahmad Bambang. When announced last week, rumours circulated that the two were part of a cull linked to corruption – sadly not uncommon in Indonesia – but the truth is more sanguine. The two simply did not get along, and their disagreements were detrimental to a state oil behemoth struggling to implement the government’s ambitious energy goals.
Soetjipto was named to Pertamina’s top job in November 2014 by President Joko Widodo. Coming from another state player – cement firm Semen Indonesia where he had successfully merged three smaller ailing state firms into a renewed force – Soetjipto was criticised for his lack of experience in oil and gas, but seen as a emblem of Widodo’s will to reform the energy sector by reducing subsidies, eliminating corruption and kickstarting a moribund industry. Perhaps as a counterbalance, Ahmad Bambang was named Deputy CEO in October 2016 by State-Owned Entreprises Minister Rini Soemarno, a mere three months ago. Bambang was a career Pertamina man, seen as more in line with the existing state oil and gas bureaucratic machinery than Soetjipto.
Both immediately began to butt heads. Bambang overstepped his position by signing off on gasoline imports that were being put off by Soetjipto, a breach of authority. The two also disagreed on key position appointments, leaving important roles like the president director of Pertamina Gas unfilled. Corporate disagreements are not uncommon, but the situation between Soetjipto and Bambang was getting toxic, leading up to their dismissals by the Pertamina board of commissioners and the Ministry of State-owned Entreprises.
The spat comes at a difficult time for Pertamina, struggling to manage upstream production while hitting dead-ends on raising domestic refining capacity. Pertamina’s crude production is declining – forcing it out of OPEC for a second time last November as it could not implement supply cuts - but wants to nearly triple its upstream output by 2025, focusing on jumpstarting domestic fields and hunting for overseas assets. Meanwhile, growing fuel demand is leading to a reliance on expensive exports, as Pertamina’s grand plan to upgrade/build new refineries has stalled. Some progress had been made under Soetjipto, but just last month, Saudi Aramco pulled out of the Dumai project, while Pertamina admitted it may have to undertake the Balongan upgrade alone.
Pertamina’s board is hoping that a new management structure will help speed up things. Yenni Andayani, director for gas and renewable energy, has been named as acting CEO, while the government searches for a new leader by early March. The position of Deputy CEO will be abolished, centralising power in the new CEO, and a streamlining of the company’s 20 existing strategic positions may be implemented. Which raises the question: if the issue was the clash of personalities, why fire both? Soetjipto was a Widodo appointee, so removing him and promoting Bambang would have seemed like an usurpation, but retaining Soetjipto and removing Bambang was not an option as the state energy machinery still viewed the former as an outsider. So both heads had to fall.
This recent development will certainly colour the search for a new CEO, almost certainly to be an executive already rooted within Pertamina. But uneasy lies the head that wears the crown, and the new CEO will step into a some very large boots because the challenges facing Pertamina are vast.
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Tyre market in Bangladesh is forecasted to grow at over 9% until 2020 on the back of growth in automobile sales, advancements in public infrastructure, and development-seeking government policies.
The government has emphasized on the road infrastructure of the country, which has been instrumental in driving vehicle sales in the country.
The tyre market reached Tk 4,750 crore last year, up from about Tk 4,000 crore in 2017, according to market insiders.
The commercial vehicle tyre segment dominates this industry with around 80% of the market share. At least 1.5 lakh pieces of tyres in the segment were sold in 2018.
In the commercial vehicle tyre segment, the MRF's market share is 30%. Apollo controls 5% of the segment, Birla 10%, CEAT 3%, and Hankook 1%. The rest 51% is controlled by non-branded Chinese tyres.
However, Bangladesh mostly lacks in tyre manufacturing setups, which leads to tyre imports from other countries as the only feasible option to meet the demand. The company largely imports tyre from China, India, Indonesia, Thailand and Japan.
Automobile and tyre sales in Bangladesh are expected to grow with the rising in purchasing power of people as well as growing investments and joint ventures of foreign market players. The country might become the exporting destination for global tyre manufacturers.
Several global tyre giants have also expressed interest in making significant investments by setting up their manufacturing units in the country.
This reflects an opportunity for local companies to set up an indigenous manufacturing base in Bangladesh and also enables foreign players to set up their localized production facilities to capture a significant market.
It can be said that, the rise in automobile sales, improvement in public infrastructure, and growth in purchasing power to drive the tyre market over the next five years.
Headline crude prices for the week beginning 14 January 2019 – Brent: US$61/b; WTI: US$51/b
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GEO ExPro Vol. 15, No. 6 was published on 10th December 2018 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.
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