From maritime services across Indonesia, Arghaniaga eyes Asian expansion

With a fleet of 70 ships crossing 26 provinces, PT Arghaniaga Pancatunggal plans to expand its fuel servicing operations overseas.

Well-versed with the archipelagic makeup of Indonesia, PT Arghaniaga Pancatunggal ventured into maritime services in 2001 and has since perfected the movement of mining products from island to island. Having grown its reputation, Arghaniaga became an official partner of a national energy company, Pertamina, in supplying fuel for various industrial needs in Indonesia. It exclusively procures oil from Pertamina and provides refuelling for ships, rigs and mining companies.

Today, Arghaniaga plays a vital role in meeting the fuel requirements of the country’s shipping industry and is setting its sights on expanding into Asia. “We were appointed as a partner by Pertamina for retail. As in the case of mining ships, they don’t buy fuel at the Pertamina depot, instead they come to the port or to the mine. This is where we step in. We are present at service points such as ports, facilitating refuelling for incoming ships,” explained Arghaniaga’s Founder, Yudhi Fu in an exclusive interview with the Asian Business Review.

Since it was first established at a port in Banten, West Java, the company now has service points in 26 provinces in Indonesia. These service points include Merak, Jakarta, Surabaya, Cirebon, Banyuwangi, Semarang, Lampung, Banjarmasin, Muara Satui, Balikpapan, Samarinda, Patimban, Makassar, Kendari, Morowali, Bitung, Bangka, Batam, Palembang and Belitung.

Looking ahead, Yudhi envisions expanding the company’s presence through branches in eastern Indonesia — particularly Sorong, Kendari and Halmahera — and to be “aligned with the government’s focus on regional development” to serve not just territories with coal mining, but nickel as well. “For the past two years, we have focused on opening branches and the target is to open 10 branches there,” he said, adding that the number of existing service points is already a strategic advantage for Arghaniaga.

“Because we already have branches in almost all provinces in Indonesia, the services we provide are faster and easier for consumers, functioning as a comprehensive one-stop service,” said Yudhi.

 Meeting fuel demands

Biosolar, a type of fuel that is used for “ignition compression” with the same fuel quality demanded by compression ignition engines from Cetane, is one of the products distributed by Arghaniaga. In general, biosolar is used in fuel for all types of high-speed diesel engines above 1,000 RPM (revolutions per minute) and can be used for direct combustion in small kitchens, which are needed for clean sales.

Arghaniaga also has MFO or Marine Fuel Oil, which is a non-distillate fuel but a residue-type product that is dark black chromatic and thicker than diesel. MFO is intended for direct combustion fuel in large industrial kitchens such as steam power plants.

Furthermore, there is MDF or Marine Diesel Fuel, which is a distillate type product containing heavy fractions or a mixture of light and heavy distillate fractions which is generally used for diesel engine fuel with medium or slow rotation at 300-1,000 RPM. It is also used for direct combustion in industrial kitchens.

Yudhi said the company extends operational amenities, offering oil tankers or often referred to as Self Propelled Oil Barges (SPOB) with a transport capacity of up to 3,500 kiloliters or KL; pump capacities of 150 KL to 250 KL/hour; and flow meters which are calibrated regularly and covered by certificates of eligibility. “Currently we can sell up to 30,000 tons per month and operate around 70 ships,” he said.

To ensure both quality and service, Arghaniaga maintains stock stored in its ships, facilitating prompt customer service and preserving product quantity and quality through methods such as initial sounding, final sounding, and the use of certified flow meters.

 Navigating challenges

During the interview, Yudhi acknowledged that due to Indonesia’s extensive territory and archipelagic nature, there arises an uneven distribution of maritime services among regions. “The challenge ahead is to ensure the even distribution of this service especially in eastern Indonesia which requires regulation from the government,” the company’s Founder said.

He also highlighted the problem of cruise ships from abroad that enter Indonesian waters and encounter difficulty in buying fuel. What is provided to them is fuel mixed with biodiesel or B35, even though these ships need pure fuel without a mixture. “In this case, we propose to Pertamina, especially their subsidiary, Pertamina Patra Niaga, that one of our companies, PT Arghaniaga Tritunggal, be designated as an international bunker agent specifically serving foreign ships. This proposal is still in the discussion stage,” Yudhi said.

Another challenge arises from the volatility of oil prices. So far, oil prices are still based on international policies. “This is what we have to be observant of, so we apply several strategies such as when oil prices fall, we stock up. When the oil price goes up, we release it so the price can be lower,” he said.

 The oil business, Yudhi noted, requires strategic financial management.  At present, external funding such as from banks constitutes 30% of his company’s financial structure. “The rest comes from our strength, from our internal resources. I don't force it,  for instance, if our capacity allows us to transport 5KL, then we refrain from exceeding that limit,” he said.

 Expansion targets

Recognising potential opportunities within domestic maritime services, Yudhi said his company plans to expand overseas by establishing a branch in Singapore. Citing Singapore as the largest international bunker agent in the world, he described the city-state as a strategic location.

Despite lacking its own oil fields, Singapore has evolved into one of the foremost fuel producers on a global scale, due to its several large oil refineries. These unique qualities have attracted multinational oil companies to establish their oil refineries in the Lion City, Yudhi noted.

Based on data processed by the Statistical Review of World Energy 2022 by BP, the capacity of oil refineries in Singapore is one the largest in the world and can reach 1.46 million barrels of crude oil per day. “Our goal for this expansion is set for the next year as we perceive Singapore as a major player in the world of bunkers,” Yudhi revealed.

“For the beginning, we will first try through the branch office in Batam and later target (the market) there. This way, hopefully, foreign ships can directly obtain it from Indonesian companies. Alongside Pertamina we can be hosts in our country,” he concluded.