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.