Pertamina fights to secure crude from Mobil and BHP

Pertamina fights to secure crude from Mobil and BHP

SINGAPORE (Reuters): Indonesian state oil company Pertamina has in principle concluded deals to buy three July cargoes of crude from Asia and West Africa with private oil firms, but final agreement is subject to Pertamina's ability to open letters of credit, traders said yesterday.

However, Pertamina has purchased three cargoes of Malaysian crude for July lifting under open credit terms with state-owned Petronas, industry sources said.

The Malaysian cargoes represented the first crude deals that Pertamina has concluded directly on the spot market.

All previous crude deals were done through affiliates Perta and Indoil.

But following the resignation of long-term President Soeharto in May oil minister Kuntoro Mangkusubroto said that Pertamina would review its relationships with affiliates.

Traders said Pertamina has bought two 600,000-barrel cargoes of Papua New Guinea Kutubu crudes from producers Mobil and BHP Petroleum, and 900,000 barrels of Nigerian Qua Iboe, from Mobil.

But traders said that the sellers were still trying to obtain letters of credit, with Mobil currently holding talks with Pertamina in Jakarta.

Mobil is to deliver Pertamina's first cargo, scheduled to be loaded on June 28, traders said.

Indonesia's financial crisis has made it difficult for most Indonesian trading companies to secure letters of credit from international or foreign banks.

However, industry sources said Pertamina has secured 1.5 million barrels of Malaysian crude oil for lifting in July.

They said the seller -- Petronas -- has offered open credit terms for the cargoes so that covering letters of credit are not required.

In addition, Pertamina appears to have paid on the market for the crude.

They said Pertamina is to pay APPI Tapis +5 cents per barrel for 600,000 barrels of Tapis, APPI Tapis +5 cents for 450,000 barrels of Miri and APPI Tapis -30 cents for 450,000 barrels of Bintulu.

Separately, Japanese trading house Mitsubishi Corp is negotiating directly with Indonesian to sell a cargo of gas oil to state-owned Pertamina, a company source said.

However, contrary to reports, Mitsubishi has not entered into a products-for-crude barter deal because Pertamina rejected the idea, the source said.

Instead, Mitsubishi was negotiating to sell gas oil outright.

"We are in the final stages of negotiation (on the gas oil sale) with two, three subjects still outstanding," the source said.

But he said Mitsubishi was facing difficulties with letters of credit because Pertamina was as yet unable to obtain a letter of credit from a bank acceptable to the Japanese company, he said.

Earlier in June, a Pertamina official said the company faced cash flow problems because of the depreciation of the rupiah.

The general downturn in the Indonesian economy has meant that most Indonesian companies have difficulty raising letters of credit from international banks.

But now, other Japanese companies like Itochu Corp and Mitsui & CO were also heard attempting to sell gas oil to Indonesia, trading sources said.