Indonesia may keep oil product imports down

Indonesia may keep oil product imports down

SINGAPORE (Reuters): Indonesia is not expected to step up spot
gas oil and jet fuel purchases despite its failure to renew a
one-year term contract with Kuwait Petroleum Corp (KPC) which
expired in March, industry sources said yesterday.

"I really don't think they will be buying more, I have not
seen them (in the spot market)," a trader, with a western oil
company which is a regular supplier into Indonesia, said.

Traders said Indonesia is not expected to raise spot imports
due to a slowdown in domestic demand, increased local refining
capacity and its financial woes.

"Our financial position has just been restored and we are just
starting to open letters of credits again. Our imports are only
slowly creeping back to normal," a source at an affiliate of
state-owned Pertamina said.

"Spot purchases will remain low."

Facing its worst economic crisis in decades, Indonesia's
ability to pay for oil product imports have been severely hurt,
traders said.

Traders estimate that Pertamina still owed its affiliates, who
act as middlemen between Indonesia and its suppliers, around
$100 million for past oil purchases.

Under its one-year term contract with KPC, Indonesia received
one 50,000 ton cargo of jet fuel and one 80,000 tonnes gas oil
cargo every 40 days.

Indonesia had requested KPC to rollover 100,000 tonnes of jet
fuel and 80,000 tonnes of gas oil, from February and March to a
later date which has yet to be fixed.

The sources said Pertamina's two affiliates in Singapore--
Indoil and Perta --have purchased three million barrels of gas
oil and 60,000 tonnes of fuel oil for delivery in April but no
jet fuel.

On a normal month, Indonesia imports between three to five
million barrels of gas oil, 1.5 million barrels of jet fuel and
1.3 million barrels (200,000 tonnes) of fuel oil from the spot
market, he said.

"But April is not a good yardstick because we didn't import at
all in February and March," the source said.

"We should be watching for Pertamina's orders in the coming
months," the source said.

Pertamina's increased gas oil import in April was due to the
unexpected shutdown of its 125,000 barrel per day Balongan
refinery in late February.

The refinery is due to re-start in early April.

Pertamina has been running the remainder of its 1.05 million
bpd domestic refining capacity at maximum to minimize imports,
traders said.