Refiners must be efficient: Kuntoro

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)