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.