Pertamina to alter purchasing policy<\/p>\n
SINGAPORE (Reuter): Indonesian state oil company Pertamina
\nwill resort to spot purchases rather than contracts to meet
\nincreased demand for refined oil products next fiscal year, a
\ncompany official said yesterday.<\/p>\n
\"It's difficult to have long term contracts for oil products
\npurchases and we usually buy from the spot market,\" the official
\nof the national oil company said in a telephone interview from
\nJakarta.<\/p>\n
\"Even if we manage to tie up a contract with a refinery, the
\nprice would still be market-related and would have to be reviewed
\nfor every shipment,\" he added.<\/p>\n
Pertamina president-director Faisal Abda'oe told a
\nparliamentary hearing on Tuesday that Indonesia would have to
\nimport 34.4 million barrels of diesel in fiscal 1996\/1997
\n(April\/March), nine million barrels more than in 1995\/1996.<\/p>\n
This works out to a monthly average of 2.8 million barrels for
\nthe new fiscal year, compared with 2.1 million barrels currently.<\/p>\n
Abda'oe also said jet-kerosene fuel imports would rise to 16.8
\nmillion barrels, or 1.4 million barrels a month, from 14.4
\nmillion barrels, or 1.2 million barrels a month.<\/p>\n
Pertamina, through its affiliates, only has one term purchase
\ndeal, with Kuwait Petroleum Corp (KPC) for 80,000 tons of diesel
\na month. It also buys kerosene under this deal.<\/p>\n
The senior official noted Singapore refineries were able to
\nexport about 800,000 barrels per day (bpd) of oil products to the
\nregion.<\/p>\n
But he said the region's huge demand absorbed most supplies
\nfrom Singapore and extra cargoes had to be shipped in from the
\nMiddle East, the Mediterranean, Europe and the United States.<\/p>\n
Such a volatile market meant it was better to buy from the
\nspot market where the buyer could choose sellers for every cargo,
\nrather than be committed to a term contract and still be subject
\nto regular price reviews, he said.<\/p>\n
\"It is also difficult to have a long term contract with any
\nrefinery because everybody wants to diversify their buyers,\" he
\nsaid.<\/p>\n
The official attributed the rise in diesel demand to greater
\nnumbers of diesel-fueled vehicles. Industries using diesel
\ngenerators also consume larger amounts of the product.<\/p>\n
Traders said Indonesia's increasing thirst for diesel and
\nkerosene will help absorb some of the extra supplies in the
\nregion when new refineries start up over the next two years.<\/p>\n
Thailand will produce an additional 275,000 barrels per day
\n(bpd) of oil product and South Korea 620,000 bpd more by 1997.<\/p>\n
\"At the last APPEC (Asia Pacific Petroleum Conference) in
\nSeptember everybody was bearish,\" a trader with a major oil firm
\nsaid. \"This new demand will offset the bearishness linked to the
\nnew refining capacities.\"<\/p>\n
Abda'oe also said Indonesian crude oil imports would rise to
\n62.4 million barrels in 1996\/1997 from 59.0 million barrels.<\/p>\n
He said whether or not Pertamina struck a new term deal for
\nextra crude imports would depend on the \"market situation\" as
\nJakarta sought more middle-distillate rich crudes like Malaysia's
\nDulang grade and sold more of its own crudes which are low in
\nmiddle-distillate yield.<\/p>\n
But crude traders said regional light sweet crude supplies
\nwould continue to be tight and Indonesia would find it hard to
\nsecure this grade. It would have to look outside the region,
\npossibly to West Africa, they said.<\/p>\n
Analysts have predicted that Indonesia, OPEC's only Asian
\nmember, will become a net oil importer sometime around the turn
\nof the century as booming demand outpaces domestic production.<\/p>",
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