Pertamina looks to halt import of crude oil

Pertamina looks to halt import of crude oil

SINGAPORE (Reuters): Indonesian state-oil firm Pertamina is holding talks with suppliers to halt outstanding imports of crude and products in February, an affiliate source said yesterday.

The move surprised some traders because Indonesia, a member of the Organization of the Petroleum Exporting Countries (OPEC), is a net exporter of dollar-denominated oil.

But traders said the move was another clear sign of the dire financial crisis facing the country of 200 million people, which is staving off its worst drain on foreign reserves in decades.

An affiliate source of Pertamina told Reuters yesterday that Indonesia wanted to halt any outstanding imports for the month of February in order to cut back foreign reserve spending. He declined to be named.

"The decision was taken a few days ago...for the time being it is applying only to February cargoes," the affiliate said.

Indonesia produces around 1.4 million barrels per day (bpd) of crude oil and its refinery sector produces just more than one million bpd of oil products.

But it has traditionally exported around 800,000 bpd of crude and imported around 200,000 bpd to suit the needs of its refineries.

It also imports some oil products, including around 130,000 to 160,000 bpd of gas oil and kerosene to cover a net shortage of middle distillates.

Pertamina has four affiliated companies that buy and sell oil in the international market on its behalf.

A spokesman for the oil firm in Jakarta was unavailable for comment.

Pertamina said earlier this month that it was looking to limit imports, but the latest development suggests the group is cutting back even further, traders said.

"Nothing is very clear cut at the moment. Pertamina wants to cut imports totally, that is its intention. But there are some cargoes already on the way," said the source from an affiliated company.

He said the cancellation would include crude and products and that some crude and gas oil had already successfully been canceled.

"We are still talking," he said, referring to informal discussions taking place between the affiliates and Indonesia's oil suppliers.

The source declined to give details of the volumes of oil that could be canceled.

But traders said a key issue would be whether Pertamina can successfully cancel February deliveries of oil under long term contracts. The oil could be put back to March or later but suppliers could insist that deliveries go ahead.

Oil prices globally have slumped 30 percent since last October, so sellers would be reluctant to hold back contracted volume of oil, traders said.

Prices of middle distillates in Asia have been particularly hit, falling to 10-year lows in recent weeks.

On January 20, a Pertamina official said the oil firm planned to import 75.8 million barrels of oil products in the financial year starting April 1, including 45.05 million barrels of gas oil.

This compares with an estimated 64.5 million barrels of overall products and 36 million barrels of gas oil in the current financial year.