Crisis delays RI's oil import payments

Crisis delays RI's oil import payments

SINGAPORE (Reuters): Indonesia is one of the largest crude oil
exporter in Asia, but its financial crisis and a shortage of
foreign reserves has affected its ability to pay for crude and
oil products imports, traders said yesterday.

They said the Indonesian state oil company, Pertamina, has
been delaying its payments for fuel imports for the past few
months because of Jakarta's financial crunch.

"Pertamina has been extending payment for 90 to 120 days. They
don't have the U.S. dollars to pay for their imports," one trader
said.

Before the crisis, payment would normally be within two weeks
or a month at the latest, the traders said.

They said the companies bearing the brunt of the delayed
payments were Pertamina's affiliated companies, who act as
middlemen between Indonesia and its suppliers.

The amount that Pertamina owes affiliates for oil imports was
difficult to ascertain, but some traders estimated the debt to be
around US$100 million.

They said Pertamina recently had slowly started paying
affiliates for their purchases, but expected that full payment
would take some time.

"This week, the rupiah has stabilized, so that has helped
Pertamina," a Japanese trader said.

"If the rupiah remains stable for the next two months, maybe
Pertamina can pay off its debts, but if not, then it will be very
difficult," he added.

Indonesia exports more 800,000 barrels-per-day of crude,
although only part of this is Pertamina's, as a portion is given
to foreign producers for their investments in Indonesian
oilfields.

But Pertamina does not market its crudes, nor directly import
its crude and product requirements.

It has four affiliates - Indoil, Perta, Pacific Petroleum
Trading(PPT) and Korean Indonesian Petroleum Company (Kipco) -
which buy crudes and products on term contracts and in the spot
market on its behalf.

Pertamina's main crude imports are Saudi, Iranian, Australian,
Malaysian and Chinese grades, while its main products
requirements are diesel and kerosene.

In exchange, Pertamina gives the affiliates Indonesian crudes
and some products, mainly low sulphur waxy residue, which are
resold on term contracts and in the spot market.

Pertamina's oil transactions are done in U.S. dollars, but
traders said the value of Pertamina's imports are higher than its
exports.

"Pertamina gives its affiliates crude in exchange for imports,
but the total value of the imports definitely exceeds the value
of the exports," said one trader close to Indonesia.

But financial problems resulting from a plunge in the value of
the rupiah has curbed Pertamina's ability to meet its debt
commitments to its affiliates.

The Asian crisis, of which Indonesia has been one of the worst
hit, has led to a depreciation of the rupiah value by around 70
percent since July last year.

Traders said that affiliates are pushing Pertamina to increase
its volume of crude exports to offset its debt.

But a commitment by Indonesia to reduce its crude output in
line with the Riyadh pact could limit that possibility, traders
said.

Indonesia's Mines and Energy Minister Kuntoro Mangkusubroto
said last week Indonesia would cut output by 70,000 bpd from its
OPEC quota in support of the Riyadh pact.

Indonesia's OPEC quota is 1.45 million bpd, although the
country's actual output was just 1.4 million, traders aid.