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.