Indonesia struggles to cover domestic gasoline shortage

Indonesia struggles to cover domestic gasoline shortage

SINGAPORE (Reuters): Indonesia's state-owned Pertamina has so
far been stymied in its attempt to cover a domestic gasoline
shortage in the wake of an explosion at the Balikpapan refinery,
traders said on Thursday.

The resulting shut down of a gasoline unit at the country's
second largest refinery could force Pertamina to buy up to half a
million barrels per month from the spot market.

"Shutdowns at other Asian gasoline-producing units and rampant
demand in Northeast Asia have hampered their efforts in securing
cargoes," said a trader.

In the past two months, Taiwan's new 73,000-barrel-per-day
(bpd) residue fluid catalytic cracker (RFCC), South Korean S-
Oil's 64,000-bpd RFCC, Kuwait's two 18,000-bpd units and
Thailand's 26,000-bpd reformer have all had their operations
curtailed by shutdowns.

"Any way you look at it, that's a pretty hefty chunk of supply
taken out of the Asian market," a trader said.

Gasoline supply from other sources such as Japan is not
feasible because of prohibitively expensive product prices and
freight costs.

Pertamina began seeking additional gasoline cargoes on August
7 following an explosion and fire at its 280,000-bpd Balikpapan
refinery.

The incident crippled the refinery's 20,000-bpd platformer
unit which produces mainly gasoline.

Muchsin Bahar, head of Pertamina's oil products division said
it could take four to five months before the platformer resumes
operations.

The unexpected outage only served to exacerbate the shortfall
in Indonesia as it came on the heels of a month-long shutdown of
the country's largest 83,000-bpd gasoline-producing unit at the
Balongan refinery.

However, it is not all doom and gloom for Pertamina as the oil
monopoly is in talks with China Petrochemical Corp (Sinopec) and
several Singapore refiners to secure vital barrels.

"We're currently discussing to sell to them (Pertamina) some
September barrels," a Sinopec trader said.

"We don't know how much we can sell, but we've already
informed our Chinese refineries to squeeze as much gasoline as
they can."

Pertamina first purchased directly from the Chinese major in
late June when it bought a 200,000-barrel 92 octane cargo at
around a $1.50 discount to Singapore spot naphtha quotes.

It also purchased 200,000 barrels of similar grade gasoline
from Singapore sources for September delivery.

These deals complement a rare term deal signed earlier with
Caltex Trading for the supply of 300,000 barrels of 92 octane
gasoline per month.

However, traders said the amounts were insignificant compared
to the country's requirements.

"If the platformer stays down for six months, we could be
looking at a shortfall of some 2.70 million barrels over that
period," a Singapore-based refinery trader said.

Singapore refiners said they had already received gasoline
queries from Pertamina for at least 400,000 barrels for August
but these were harder to fill.

"Most refiners have already placed their August barrels, so
we'll only be able to help with September requirements," a
refinery trader said.