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.