Oil and gas market in Indonesia
Upstream oil and gas contractors are the main target customers for Inerco. The amount of investment made for developing and producing oil and gas determines the Company's potential revenue. On condition that Indonesia's oil and gas requirements remain stable, the Company's pipes market is secure.
In general, the demand for oil and gas products in Indonesia will go up along with Indonesia's economy. However, the production of oil and gas products are forecasted to remain steady. To address this issue, the Government of Indonesia ("Goi") has been actively attempting to attract more investments into shale and coal-bed methane by inviting firms to submit bids to explore new non-conventional oil and gas blocks in the country. This action is expected to help drive oil and gas investment up.
Seasonality
The Company expects seasonality in its sales throughout the year, since its products are not freely traded but based on contracts. Obtaining contracts consistently throughout the year will become a challenge. Nonetheless, the Company has advantages in winning sales contracts due to its strong relationships with customers and the fact that its products have a high level of local contents, which are regulated to be prioritised in oil and gas activities.
Competition
The Company faces competition from its competitors, such as PT Elnusa Tbk, PT Pipa Mas Putih, PT Patraindo Nusa Pertiwi, and other companies. However, most of these companies sell imported pipes and only some have the capabilities to process pipes locally.
The Company needs to ensure exclusivity with a certain supplier to remain competitive. So far, it has secured an exclusivity with the only ERW pipe manufacturer that has API certification for upstream oil and gas casing. Ultimately, if tne Company can secure exclusivity with all producers and vendors in Indonesia, it will dominate the market.