Refiners must be efficient: Kuntoro

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto has urged state oil and gas firm Pertamina to improve efficiency at its refineries to offset the government's planned move to cut fuel subsidies.

Kuntoro said yesterday the move would reduce the refineries' production costs, and consequently cut their sales prices.

"When they can lower their production costs then, logically, their sales prices would not be too high," Kuntoro was quoted by Antara as saying in Balongan, West Java.

Kuntoro inspected the 125,000-barrel-per-day capacity Balongan refinery, which restarted its operations on Monday after a six- week repair of its residue catalyst cracker unit.

He said that when Pertamina cut its ex-factory prices of fuel, it would automatically lower the government's fuel subsidies.

Under the agreement with the International Monetary Fund, the government has to cut fuel subsidies starting Oct. 1.

"We cannot avoid increasing domestic oil prices. But if Pertamina's refineries reduce costs, this will be minimized," Kuntoro said.

Improving efficiency would also boost production and reduce fuel imports, he said.

In the past, Pertamina imported about seven million barrels of fuel monthly.

However, due to the crisis and falling domestic demand, fuel imports have also dropped to 3.5 million barrels per month this year.

Pertamina predicts the economic crisis will slow domestic demand for oil products to 49 million kiloliters in fiscal year 1998/99 (April-March), from 52 million kiloliters in the previous year.

Pertamina currently has eight refineries with capacity of 1.05 million barrels per day. However, cumulative output from them currently stands at 990,000 million barrels per day.

In addition to Balongan, refineries are in Pangkalan Brandan, North Sumatra; Dumai, Riau; Musi, South Sumatra; Cilacap and Cepu in Central Java; Balikpapan, East Kalimantan; Kasim, Irian Jaya. (rid)