LPG production declines by 20 percent

LPG production declines by 20 percent

Leony Aurora, The Jakarta Post, Jakarta

The output from state oil and gas firm PT Pertamina's two
refineries in Cilacap and Balikpapan has declined by 20 percent
recently because of operational problems and maintenance
shutdowns.

Pertamina trading and marketing director Ari Soemarno said on
Thursday that the company was trying to source imports of around
6,000 metric tons of LPG to meet the shortage of supply.

"We're trying to get imports from Singapore, Malaysia or
Thailand," he said.

Pertamina was also operating the Balongan refinery at full
capacity to meet demand in Java, he said.

Recent media reports said a scarcity of the gas in the past
few days had caused prices around the country to rise to Rp
73,000 (US$7.3) a 12-kilogram tank of LPG from the normal price
of Rp 51,000. Agents have also charged higher prices to cover the
rise in transportation costs after the government increased fuel
prices on Oct. 1.

Ari reconfirmed that Pertamina planned to raise LPG prices,
which are connected to soaring global oil prices.

"We're still calculating how much the hike will be and when,"
he said. "We definitely won't raise it before Lebaran," he said,
referring to the Muslim holiday that falls on Nov. 3 and Nov. 4.

Ari said on Aug. 15 that Pertamina would increase the price of
LPG to over Rp 5,000 per kilogram from the current set price of
Rp 4,250.

The firm pegged the current LPG price on a crude price of $36
a barrel, far lower than the international going rate of $65,
Pertamina spokesman Mochamad Harun said in a statement.

Harun said the increase in price was caused by the increase in
fuel costs. "We will tolerate an increase in prices by retailers
of between Rp 2,000 and Rp 4,000 a tank."

Pertamina would cooperate with several retailers to make sure
that customers could still purchase LPG at the normal cheaper
price, he said. It was unclear which agents would sell LPG at
such prices.

Indonesia produces between 3.5 million and 4 million tons of
LPG a year, of which less than half is sold to the domestic
market.