LOW energy demand and prices saw state owned Pertamina, the biggest oil and gas company in Indonesia, record a USD767.92 million net loss in the first half this year.
Comparatively in the same period last year, the company recorded a profit of USD659.96, according to The Jakarta Post.
Pertamina spokeswoman Fajriyah Usman said low global crude oil prices, weak domestic demand and a weak rupiah-to-dollar exchange rate amid the ongoing Covid-19 health crisis hit the company hard this year.
"Pertamina was hit by a triple shock," Fajriyah said.
Pertamina joins other oil and gas companies worldwide, such as Britain's BP, Saudi Arabia's Aramco and Chevron of the United States, that registered major losses in this year's first half due to the Covid-19 pandemic.
Aramco, often dubbed the world's most profitable company, saw its net profit fall by 50 percent to USD23.7 billion in the first semester, according to the company's latest financial report.
Pertamina's revenue plunged by 19.8 percent year-on-year (yoy) to USD20.48 billion, largely driven by lower domestic fuel and crude oil sales, as major Indonesian cities underwent large-scale social restrictions (PSBB), curbing demand for transportation.
Pertamina had reduced total expenses by 14.1 percent yoy to USD18.87 billion largely by cutting sales expenses, in a bid to minimise losses.
Yet upstream-related expenses rose as the company struggle to meet government oil and gas production targets.
The financial report also shows that the company booked a USD211.83 million loss in the first half due to the weak rupiah exchange rate, which increases Pertamina's oil import costs.
Fajriyah said however Pertamina expects to see profits by year-end as global crude oil prices and domestic fuel demand recover over the following months.
"Pertamina is optimistic that, by year end, there will be a positive trend," she insisted.
Gadjah Mada University (UGM) economist Fahmy Radhi said Pertamina's financial woes will strain the company's ability to retain employees, partners, contractors, foreign assets, tax payouts and dividend payouts.
"In the end, it will be unavoidable for Pertamina and its partners to fire employees," he said in summarising the recent development's potential impact.
"Under such conditions, Pertamina cannot contribute to economic growth."
Global crude oil benchmark price Brent dropped as low as USD19.33 per barrel on April 21 but has since rebounded to USD44.47 per barrel on Monday, according to Bloomberg.
Despite some recovery, the US's Energy Information Administration (EIA) and credit rating agency Fitch Ratings expect Brent prices to remain lower than last year at less than USD50 per barrel.
However, the risk of a second Covid-19 wave, which would likely trigger new lockdowns, loomed large over the global oil and gas industry, said analyst Dulles Wang of energy consultancy Wood Mackenzie America in a recent statement.
"A second large-scale lockdown would deepen the recession and possibly delay any rebound in GDP until 2022. This would have a significant impact on the oil and gas sectors," he said.