Despite Western sanctions, Indonesia decides to buy Russian oil

Indonesia

- The Director-General of the Indonesian National Oil Company (Pertamina) Niki Widayati said in a parliament session that her country is seeking to buy Russian oil.

While parliamentarians pointed out the need to avoid creating any political problem as a result of this decision, according to “Pertamina” based on the reality of the high cost of oil prices, part of which is borne by the state budget with its support for the fuels sold in the country, and of which the premium brands will witness an actual rise starting from the week next.

Widayati added: In light of the high prices and the geopolitical situation, we see that there are opportunities to buy from Russia at a good price. Central Indonesia.

And she continued, "With regard to this matter, and from a political point of view, there is no problem, as long as the company we are dealing with does not face penalties, and with regard to paying the value, we have coordinated that matter with India or another method, and the transactions will be between companies and there is no problem in that."

In a local press statement, Abra Talatatov, an economist at the Jakarta Institute for Economic Development and Finance, supports Pertamina's decision, considering it a necessity and a gain in terms of buying at a competitive price, in light of a high global price, which is no longer suitable for purchasing power and local inflation levels, in addition to Buying Russian crude oil at a price that competes with others will reduce the cost of refining it, he said.

Western reaction warning

While acknowledging that such a decision may face Western criticism, and the matter may extend to decisions of Western capitals regarding investment in Indonesia and its potential negative impact, but Talatatov said that this can be answered with justifications and an approach in the Indonesian discourse that the matter is related to the economic dimension, energy security and conservation. At appropriate prices and the related social and economic stability, in return for the possibility of “Pertamina” having to purchase oil from other more expensive sources, which may eventually be reflected on the consumer, indicating that there are economic risks behind making any of those decisions.

But some Indonesian analysts have another opinion, including the director of the Institute of Economic and Legal Studies in Jakarta Pema Yodestra, who expressed - in press statements to him - his concern that the United States and European countries may reduce their import of Indonesian goods in response to that decision, in the context of the sanctions imposed on Western Russia.

Yodestra warned of a possible reflection of the decision to purchase Russian oil on US and European investment decisions, including investing in the oil and gas sectors in the Indonesian islands, if Western oil and gas companies look to Indonesia as closer to Russia, he said.

He added that despite Pertamina obtaining Russian oil at a competitive price, the state may bear another cost for that decision, and a side effect for it if it affects the decisions to import goods and investment in the country, and may negatively affect economic growth as a whole.

European markets for Indonesian goods are relatively important.

According to Statistics Indonesia, it accounted for 8.1% of exports last February, or the equivalent of 1.58 billion US dollars.

As for the US market, it accounted for the same period 12.3% of Indonesia's exports, or the equivalent of $2.4 billion.

Putin's invitation to the G-20 summit

It is noteworthy that Indonesia agreed to the UN resolution regarding Russia’s war on Ukraine, but Jakarta did not take measures as its neighbor Singapore adopted regarding any sanctions against Russia due to the old relations between the two countries, and Indonesia’s attempt to balance its foreign policies in its dealings with influential international and regional powers such as the United States. The United States and China, as well as with Russia, European Union countries, India, and Australia.

In the same context, Indonesia is still committed to inviting Russian President Vladimir Putin, like other leaders, to attend the G20 summit, which is scheduled to be held next November in Indonesia.

Indonesia's ambassador to the United Nations, Dian Trianshah Gani, said - in response to Australian and Ukrainian calls for not inviting Putin - that it is Indonesia's duty as a host country to invite all leaders, and that invitations to leaders have been sent since last month.

He added: We play our role in chairing the summit, as is the case in previous presidencies, and once again, we base our diplomacy on principles. I do not want to expect what will happen in the future, but, one thing is certain, is that we will maintain a neutral presidency and will seek to find a solution to any problem. And that's what we've been doing in many organizations in our history."

The Russian Ambassador to Jakarta, Lyudmila Vorobyva, had met some leaders of the political blocs in Parliament, after she spoke about President Vladimir's intention to attend the G20 summit.

Prior to that, on the other hand, the Ukrainian ambassador to Indonesia, Vasyl Humayanin, had called on the Indonesian government not to invite Putin.

Australian Prime Minister Scott Morrison also criticized the Russian president's invitation to Indonesia - at a press conference in Melbourne a few days ago - and indicated that he spoke with President Jokowi by phone about Putin's attendance of the G20 summit.