Indonesia faces tough competition for LPG sales<\/p>\n
SINGAPORE (Reuter): Competition from Australia, Thailand and
\nMalaysia is making it more difficult for Asia's key crude oil
\nproducer Indonesia to sell liquefied petroleum gas (LPG) to its
\ntraditional customers in 1996, trade sources said yesterday.<\/p>\n
Poor response and low bids have led Indonesia's state oil
\ncompany Pertamina to request bidders of its recent two-year term
\nLPG export tender to re-submit their bids. The tender is for the
\nsale of 130,000 tons of LPG, loading from Santan, Indonesia from
\nJanuary 1996.<\/p>\n
\"We expect freight costs for small ships to increase next year
\nand therefore our bids have to be low enough to ensure
\nprofitability,\" said a Japanese bidder.<\/p>\n
Indonesia had only received three bids for the tender from
\nJapanese trading houses, Mitsui Corp, Marubeni Corp and Itochu
\nCorp. Bids ranged from a discount of between US$28 and $60 per
\nton to the industry benchmark formula set by Saudi Arabia. Its
\nprevious contract was concluded at $3 per ton premium over the
\nSaudi benchmark.<\/p>\n
\"We are intending to place the supplies into China and the
\nprice competition is tough there,\" the Japanese trader added.<\/p>\n
Outside of the Middle East, Indonesia is Asia's largest LPG
\nexporter, industry sources said.<\/p>\n
Pertamina is also expected to issue a tender to sell up to
\n320,000 tons per year of LPG from its Arjuna oil field near the
\nend of this year. The new volume, starting in January 1996, will
\nbe an increase from current term volume of 280,000 tons.<\/p>\n
Asian LPG traders expressed skepticism that Pertamina would
\nget a good price for the sales. \"With the increased supplies in
\nthis region, Pertamina would have to contend with low prices or
\nto reduce its market share,\" said the Japanese trader.<\/p>\n
\"We know that it is getting tougher these days and every
\nproducer is targeting the Japan market,\" said a Pertamina source.
\n\"China and India are potentially big importers but currently with
\ntheir poor infrastructure, these countries' imports remain small
\ncompared with Japan.\"<\/p>\n
Japan is the largest importer of LPG in Asia, buying close to
\n1.25 million tons per month. Two-thirds of its imports are from
\nthe Middle East.<\/p>\n
Competition<\/p>\n
\"We are also faced with competition from Malaysia, Thailand
\nand Australia,\" the Pertamina source added.<\/p>\n
Malaysia had just finalized discussions with its term
\ncustomers on sale of 480,000 tons per year of LPG starting in
\nJanuary.<\/p>\n
Officials from Thailand's state-owned Petroleum Authority of
\nThailand (PTT) have said the company will be increasing its
\nexports of LPG next year when two gas separation plants and two
\njoint venture refineries come onstream by March 1996.<\/p>\n
Partners of Australia's North West Shelf gas project have
\nissued a tender, closing October 23, inviting bids for its first
\nLPG sale. Supplies of up to 550,000 tons are expected to hit the
\nmarket in the second half of 1996.<\/p>\n
Indonesia's exports of close to 1.3 million tons a year of LPG
\nfrom its Arun oil and gas field, and 800,000 tons a year from its
\nBontang field have been committed to seven Japanese buyers on a
\n10-year term contract. The contracts will expire in 1998.<\/p>\n
These term holders are Mitsui Oil, Idemitsu Corp, Mitsubishi
\nCorp, Nippon Petroleum Gas Company, Cosmo Oil, Japan Energy and
\nShowa Shell.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-faces-tough-competition-for-lpg-sales-1447893297",
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"sponsor": "Okusi Associates",
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