Kuwait seals term sale of jet fuel to Indonesia

Kuwait seals term sale of jet fuel to Indonesia

SINGAPORE (Reuter): State-owned Kuwait Petroleum Corp (KPC) has sealed an annual term contract early this year to sell jet fuel to Indonesia's national oil firm Pertamina, industry sources said yesterday.

Under the deal, KPC supplies a 55,000-ton cargo of jet fuel every 40 days, they said.

There was no clear indication on price terms, but one trade source said the premium could be around 50 U.S. cents per barrel to Singapore spot quotes, cost-and-freight (c-and-f), on a ship- to-ship transfer basis.

KPC is already supplying jet fuel on term to a Singapore refiner at a premium of 25-30 cents per barrel, c-and-f, on a ship-to-ship transfer basis.

Kuwait has an ongoing term contract to supply about 80,000 tons per month of gas oil to Indonesia.

Traders said the new jet fuel deal underscored Indonesia's aim to diversify its sources of middle-distillate supplies away from Singapore by importing more from the Middle East and other regional producers.

They said by diversifying its suppliers, Indonesia was seeking more stable supplies and competitive prices, especially when the market is jolted by emergencies such as refinery problems.

Indonesia started diversifying its sources early last year and has since reduced gas oil imports from Singapore by more than 50 percent and jet-kerosene fuel by between 20 and 50 percent.

Traders noted that the jet fuel contract with KPC would further reduce Indonesia's reliance on supplies from Singapore.

Indonesia normally buys about 500,000 barrels of jet-kerosene fuel each month. The deal with KPC is translated to about 412,000 barrels.

But Indonesia has bought more jet fuel in February and March, reaching over 1.5 million barrels each month, because of refinery problems and higher demand amid the Haj pilgrimage season.