Gerindra politician Simon Aloysius Mantiri was recently appointed as the new CEO of state-owned oil and gas holding company Pertamina, followed by two other Gerindra politicians on the board of commissioners, one of them as chief commissioner. Their appointments reflect a change of Pertamina's leadership from being led by professionals to now being dominated by political figures, which raises concerns as Pertamina faces heavier challenges with declining oil production amid President Prabowo Subianto's energy self-sufficiency target.

Simon, Gerindra deputy secretary and also deputy treasury of the Prabowo-Gibran Rakabuming Raka campaign team (TKN) for the 2024 presidential election, replaced Nicke Widyawati who had served as Pertamina CEO for six years. Before being appointed as CEO, Simon had been Pertamina's chief commissioner since June 2023, replacing Basuki "Ahok" Tjahaja Purnama who stepped down from the position to campaign for rival presidential candidate Ganjar Panowo of the Indonesian Democratic Party of Struggle (PDI-P).

After Simon got promoted as CEO, Pertamina's president commissioner position was given to another Gerindra politician Mochamad Iriawan, a retired police commissioner general and a former chief of the Indonesian Soccer Association (PSSI), and a member of the Prabowo-Gibran TKN advisory board. In addition, Prabowo-Gibran TKN deputy strategic coordinator Condro Kirono was appointed as Pertamina's independent commissioner.¹

The appointment of politicians, especially those of the ruling Gerindra Party has raised concerns among analysts as Pertamina is currently under great pressure to support Prabowo's energy self-sufficiency target. During his inaugural speech, President Prabowo asserted his administration would achieve energy self-sufficiency by increasing the use of biofuels, a blend of fossil fuels with plantation products like crude palm oil (CPO), cassava, corn and sugarcane. Prabowo did not mention reversing the declining oil and gas production, though.² 

To achieve the target, Prabowo will focus on strengthening two state-owned enterprises (SOEs), Pertamina and state-owned electricity company PLN. While Pertamina is led by Gerindra politicians, PLN is led by PDI-P politician Darmawan Prasodjo, who was appointed by president Joko "Jokowi" Widodo, who was then a member of the PDI-P. Like Jokowi, Darmawan may not anymore be affiliated with the PDI-P.

Regarding PLN, Prabowo sees no problem in meeting electricity needs as the country has abundant coal and renewable energy sources, especially hydro and geothermal. As for Pertamina, Prabowo sees the problem in the high imports of oil and liquefied petroleum gas (LPG). Therefore, Prabowo told Pertamina to reduce and eventually stop importing oil by increasing production of biofuels and seeking alternative financing without relying on fiscal incentives and debts.³

Indonesia has been a net oil importer since early 2004, when oil output was at 1.13 million barrels per day (bpd). Since then Indonesia's oil lifting has been declining consistently to only 576,110 bpd in the first half of 2024.⁴ In fact Indonesia's oil output has been declining since 1991, when output reached one of its peaks at 1.67 million bpd.⁵ While Indonesia's oil lifting has been declining, domestic demand for fuels has increased, resulting in the higher demand for crude, now at 1.6 million bpd, most of which is imported.⁶

Indonesia's declining oil production has been attributed mainly to aging oil wells, 70 percent of Indonesia's oil wells are aging, as well as declining oil reserves because of a lack of new investment in the upstream sector. In response to declining production, Energy and Mineral Resources Minister Bahlil Lahadalia plans to meet the new CEO of Pertamina to devise plans to revitalize 4,500 idle oil wells located in 301 work areas under the Plan of Development (POD) contracts.⁷

There are a number of new discoveries of gas reserves such as the ones in East Kalimantan and North Sumatra in 2023.⁸ But gas development has been slow due to various reasons, including the development of giant Masela gas project in Maluku by Inpex Corporation of Japan, whose operation has been delayed several times.

Considering his ambitious energy self-sufficiency target, Prabowo is committed to protecting PLN and Pertamina executives from legal problems as he warned the Attorney General's Office and the National Police not to be too quick to arrest them but to report to him beforehand instead.⁹ This is aimed at allowing both companies to have greater flexibility and achieve a higher performance.¹⁰ 

Several sources from Gerindra's inner circle say the appointments of Simon Aloysios Mantiri and Mochamad Iriawan, respectively as president director and chief commissioner of Pertamina, was pushed by Hashim Djojohadikusumo, the President's younger brother. They also observed that Hashim held sway over eseveral top-tier SOEs like Pertamina and PLN, as well as others state-owned companies.

In addition to his ties with Gerindra, Simon has a close relationship with Prabowo's family. It is rumored that Simon had long planned to become Pertamina president director, and that his previous position as the oil and gas giant's chief commissioner was always meant to be temporary. While Simon generally prefers to stay behind the scenes, sources say Prabowo and Hashim believe it would be better for him to step forward.

In addition to his role in Agro Industri Nasional (Agrinas), Simon was once part of the leadership at Nusantara Energi, which belongs to the President. The sources also suggest that Erick Thohir's role as SOEs Minister is gradually being reduced, so that he would not be as influential as he was previously.

The appointment of individuals close to Prabowo and Hashim to senior leadership posts at SOEs aligns with the President's broader plan to establish the Danantara Nusantara Power Investment Management Agency. This new agency is expected to replace or diminish the role of the SOEs Ministry, with a potential plan for Danantara to oversee a number of highly profitable SOEs, such as Pertamina, PLN and several Himbara banks, to leverage their assets as attractive investment destinations. According to the sources, Erick is less than enthusiastic about this scenario.