Indonesia delays oil imports for one month

Indonesia delays oil imports for one month

SINGAPORE (Reuters): Indonesia has delayed key imports of oil
products for one month and its affiliated oil buyers are asking
for extended credit to help smooth over the currency crisis, oil
industry sources said yesterday.

State oil firm Pertamina has delayed the delivery of 135,000
tons (one million barrels) of gas oil and kerosene from state-oil
firm Kuwait Petroleum Corp (KPC), the sources said.

The shipments were due to arrive in Indonesia in February, but
have been delayed until March.

"It (Indonesia) will not take anything in February, and the
deliveries have been delayed to March," an industry source told
Reuters.

"It is for the same reason why they cut imports in the first
place. They do have financial trouble and they....have plenty of
stocks," the source said.

Pertamina's processing director recently said imports in
February could be half the usual 150,000 barrels per day (bpd)
and could grind to a halt in March.

"It will save foreign exchange. We will maintain our fuel
stock at 33-34 days. There is no problem," Samto Utomo said at
the time.

Pertamina officials were not available for comment yesterday.

Gas oil and kerosene are used widely in Indonesia for
transport, power and heating.

Although a member of the Organization of Petroleum Exporting
Countries (OPEC), Indonesia is a net importer of middle
distillates.

Its refinery sector, with capacity of around 1.05 million bpd,
does not produce enough middle distillates to meet domestic
demand.

It also subsidizes domestic prices of oil products but has
promised the International Monetary Fund (IMF) it will start
cutting subsidies from April this year in return for a $43
billion rescue package.

KPC was to deliver 80,000 tons (600,000 barrels) of gas oil
during February under a one-year term supply contract with
Indonesia.

It also was to deliver 55,000 tons (434,000 barrels) of jet-
kerosene, which it normally delivers every 40 days under a term
contract with Indoil, an affiliate of Pertamina.

The rollover of the February cargo means that Indonesia will
not import any middle distillates in February, the sources said.

It also means that KPC will have two months' supply to deliver
in March, which could dampen any hopes in the Asian oil market
that Indonesia would have any incremental demand during the
presidential election period.

The global oil market is struggling with massive oversupply
and slowing demand, brought about by mild winter weather in
northern hemisphere, the currency crisis in some Asian countries
and extra supplies from OPEC.

In another sign of the depth of Indonesia's currency crisis,
affiliates of Pertamina have asked for credit of up to 180 days
for buying oil instead of the usual oil market practice of 30
days credit.

The affiliates have made enquiries about buying oil for March
import.

KPC's one-year supply contract with Indoil for middle
distillates expires after March 1998, but is likely to be
renewed, trade sources said.