Wednesday, January 30, 2008

Sand castles

Hilmi Panigoro, head of Indonesia's largest public oil company, Medco, is over the moon: all five of his wells in Libya have struck oil. This is a rags to riches story. He was one of 11 children. His parents owned a fabric shop in Bandung which went bankrupt in the 70s so they sold their house and got a loan to start a printing business. When the father died, Hilmi's eldest brother, Arifin, took over the household and paid for his siblings' education. Hilmi won second prize in a national classical guitar competition and a scholarship to study in Italy but his music teacher advised him to finish his engineering degree instead. Meanwhile Arifin had already graduated in engineering and had started an electrical equipment company. He was doing some repairs on drilling rigs for Pertamina and realised that the oil business was the way forward so he founded an oil drilling company which became Medco. Medco bought various oil fields in Indonesia in the 90s, one of which, on Sumatra, was extremely lucrative: they needed 15m barrels to break even and they found 200m barrels.
Hilmi had been working for 15 years as a geologist in Houston and joined Medco in 1997, the year of the Asian economic crisis. Medco was forced to refinance and sold half its equity to Credit Suisse. Hilmi took over the company from his brother in 2001 and managed to buy back a 34% stake in the company which had been sold on by Credit Suisse. The Indonesian oil industry is maturing so Medco has been venturing into Australia,Libya, Cambodia, Oman, Tunisia and Yemen. The Libyan desert is definitely improving the brothers' spirits and fortunes.


Blogger Welshcakes Limoncello said...

Very interesting story about which I knew nothing. I hope he will use some of his millions to do some good in the world.

12:01 am  
Blogger Winchester whisperer said...

Indonesia's had rather a rollercoaster ride economically so I thought that it was interesting to see that reflected in this family's fortunes. We'll see if he sponsors any classical guitar scholarships in the first instance.

2:03 pm  

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