Pertamina crude demand seen unchanged

Pertamina crude demand seen unchanged

SINGAPORE (Reuters): Indonesian state-oil company Pertamina has started to source its September crude requirements and is expected to purchase the same volumes as August, traders said yesterday.

"They are in the process of buying September, but they will probably import the same as they did in August," a western trader said.

Traders said that offers of crude included Malaysian crudes, regional condensates and Nigerian Qua Iboe.

In August, traders said that Pertamina bought around 100,000 barrels-per-day (bpd) of crude on the spot market, totaling around six cargoes of Malaysian Tapis, Miri, Bintulu and Australian Varanus, Challis and Jabiru.

Indonesia is a net exporter of crude, but imports some crude to suit refinery needs.

The August purchases were similar to Indonesia's average monthly imports last year, which were carried out by two of Pertamina's affiliates, Perta Oil and Permindo.

For more than a decade, Indonesia had covered all its oil needs through Perta Oil and Permindo, which are majority owned by friends and family members of former Indonesian president Soeharto.

Pertamina started to trade its own accounts from July, sidelining the affiliates, as reform swept the oil sector following Soeharto's fall from power.

Traders said that Pertamina has not hit any major snags in its new role as sole importer of crude and products for the country, but it was still premature to predict that it would be smooth sailing from now on.

"Traders are taking it one month at a time and one deal at a time," said a western trader.

"I think it will still be rough going for them in the next few months, not everybody's really comfortable in dealing with them compared to dealing with Perta and Indoil (Permindo)," the trader said.

"We've only just been paid by Pertamina for our July sales, but it was with all the interest," a trader said.

Traders said that most of Pertamina's purchases lately have been from national oil companies, or traders and majors who already have investments in Indonesia, and which might be more willing to be flexible with credit terms.

"We have heard Pertamina requesting for payment periods of 60 to 120 days, and some traders are more open about giving them that in order to maintain the relationship," said a trader.

In July, when Pertamina first entered the spot market, it bought three cargoes of Malaysian crudes from state oil company Petronas, on open credit terms, which did not require letters of credit.

It also concluded a deal in July to buy Kutubu crude from Mobil, producing letters of credit from local banks although Mobil had initially asked for letters of credit from international banks.

"Mobil has business in Indonesia and they were ready to be more flexible," said a trader with a major oil company.

But an agreement for Australian producer to sell July Kutubu to Pertamina fell through as Pertamina was unable to obtain letters of credit from international banks as requested by the seller.

Subsequently, Pertamina did produce letters of credit from international banks for a July Tapis cargo it bought from British Petroleum Co Plc, although details of the trade could not be confirmed.