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.