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.