Jakarta, Indonesia Sentinel — Shell Indonesia may soon shutter its network of gas stations across the country, unable to compete with the market dominance of Pertamina, the state-owned energy giant. The potential closure underscores the challenges faced by foreign companies in Indonesia’s tightly regulated fuel market.
Market Realities
According to Moshe Rizal, Chairman of the Investment Committee of Indonesia’s National Oil and Gas Association (Aspermigas), Pertamina’s stronghold on fuel distribution has left little room for competitors.
“The market dynamics in Indonesia are clear. Pertamina controls the majority of gas stations, making it difficult for others to compete,” Rizal stated in an interview with Liputan6.
Shell’s Evolving Focus
Shell initially gained a foothold in Indonesia, offering premium fuel options that outperformed local competitors. However, its global pivot toward renewable energy and electric vehicle (EV) infrastructure has reshaped its priorities. In 2021, Shell announced plans to close 1,000 gas stations globally by 2025 to focus on EV charging and low-carbon solutions.
Pertamina’s Competitive Advantage
Pertamina’s exclusive rights to sell subsidized fuel in Indonesia provide it with a competitive edge. Additionally, the company has invested in improving its service quality and product offerings, further solidifying its market dominance.
“Pertamina is continually enhancing its services and remains the top choice for Indonesian consumers,” Rizal noted.
Shell’s likely withdrawal highlights the difficulties of competing in a market where government-backed enterprises hold a monopoly on key resources, leaving foreign players at a significant disadvantage.
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Key Takeaway
Shell’s potential exit from Indonesia reflects the broader trend of shifting priorities in the global energy sector while emphasizing the complexities of operating in markets dominated by state-owned entities.
(Becky)
