Indonesia seeks refined product supplies

The Organization of Petroleum Exporting Countries' only net importer of oil, Indonesia, faces a shortage of processed fuels after refinery shutdowns over the last two months because of accidents.


SINGAPORE�The Organization of Petroleum Exporting Countries' only net importer of oil, Indonesia, faces a shortage of processed fuels after refinery shutdowns over the last two months because of accidents.

Indonesia's energy minister visited neighboring countries recently to negotiate contracts to meet the deficit. The country's oil monopoly Pertamina has been trying to get fuel supplies from Malaysia, Singapore, China, and India.

Shortages of key oil products such as gasoline and kerosine, a common cooking fuel, have previously sparked off civil unrest, and Jakarta is working hard to ensure that supplies are not disrupted despite the country's current production woes.

There were long queues at gasoline kiosks throughout Jakarta recently, as panic-buying prompted motorists to pump more gasoline to beat the shortage.

That shortage resulted from problems at the Balongan refinery, which supplied 80% of the capital's demand. The refinery in West Java has been undergoing major repairs.

A Pertamina spokesman said that an increase in demand caused a shortage in kerosine supplies.

Indonesia seeks alternate processing capacity

Indonesian oil monopoly Pertamina has begun talks with Singapore refiners to process up to 50,000 b/d of crude to help it tide over critical domestic oil shortages, industry sources in Singapore said. Those sources also said Pertamina was in talks with Royal Dutch/Shell Group, but a company spokesman declined to comment.

Pertamina spokesman Baihaki Hakim said that the company was negotiating a crude oil processing deal with Singapore to reduce the import of oil products. He said that it was still being calculated how much could be processed in Singapore.

Industry sources say Pertamina is likely to fare better than Kuwait Petroleum Corp. in its search for refining space in Singapore. This is because Indonesia is in the process of opening up its oil market, and help during such critical times may not go unnoticed.

KPC, which sought out Singapore refiners after its largest refinery was razed in a fire in late June, failed to secure an agreement, as the refiners quoted high processing fees and were not keen to buy back products KPC did not require.

A trader said that the Pertamina situation was different. Pertamina would most probably take all the products�except possibly naphtha�but, more importantly, there is the incentive of scoring brownie points, he said.

Singapore's third largest refiner, Singapore Petroleum Co. (SPC), also plans to raise its refinery output by as much as 10% by the end of the month to meet growing demand for kerosine and other fuels in Indonesia

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