Pertamina seeking tanker to store LSWR

Pertamina seeking tanker to store LSWR

SINGAPORE (Dow Jones): Indonesian state-owned oil and gas
company Pertamina is planning to charter an Aframax tanker to
store low sulfur waxy residue from its Cilacap refinery, traders
told Dow Jones Newswires on Thursday.

Pertamina last week inquired about the time-charter of an
Aframax tanker as well as a Very Large Crude Carrier, shipbrokers
said.

Aframax-type tankers carry between 80,000 metric tons and
129,999 tons of oil products.

Following the shutdown last month of a secondary unit at the
348,000-barrel-a-day Cilacap refinery, Pertamina had offered
straight-run low sulfur waxy residue for export, traders said.

But the straight-run LSWR isn't drawing buying interest
because of logistical constraints as lifters "can only load one
200,000-barrel cargo at any one time from Cilacap terminal," a
trader said.

In Balikpapan, lifters can load larger LSWR cargoes in
ship-to-ship transfer operations, to save on shipping costs
through the deployment of larger tankers.

With a floating storage vessel, Pertamina can offer its
lifters larger cargo lots, a trader said.

Pertamina has had a difficult time trying to sell its
straight-run LSWR owing to draft and other logistical constraints
at Cilacap, which has traditionally not been a LSWR supply
source.

The shutdown of Pertamina's Balongan refinery in February
restricts use of the straight-run material for further processing
domestically.

According to a Pertamina formula, straight-run is valued at a
75-cents/bbl premium to the mixed/cracked LSWR Indonesia
typically exports.

Owing to the recent surge in Indonesia's LSWR export
availability, Pertamina is planning to blend the straight-run
material with mixed/cracked LSWR to attract more buyers.

As a result, premiums for mixed/cracked LSWR are expected to
fall below 50 cents/bbl from the current 60-cents/bbl level
against Pertamina's price formula, traders said.

Pertamina's February LSWR export allocation is expected to
rise to 3.99 million barrels, up from 2.53 million barrels in
January.