Refinery closure causes few oil ripples

Refinery closure causes few oil ripples

SINGAPORE (Reuters): The closure of Indonesia's 125,000
barrels-per-day (bpd) Balongan refinery was unlikely to prompt a
pick up in oil product imports in March, traders said yesterday.

Indonesia's oil product imports have ground to a halt amid the
countries worst economic crisis in decades.

But Balongan is mostly geared to exports of oil products, so
the biggest impact could be on Indonesia's dollar earnings, oil
traders said.

They said state-owned Pertamina had not issued any
requirements to the market for key middle distillate imports to
cover the loss of production from Balongan, raising the prospect
of continued zero product imports.

But the closure could ease some extra Indonesian crude onto
the international spot market, traders said.

A source close to the refinery said on Monday that the complex
was shut down last week for one month because of mechanical
problems.

The long shut down period reflected the time it would take to
get spare parts, the source said.

The refinery is largely geared to exports with its 83,000 bpd
catalytic cracking unit providing gasoline and naphtha, which
will impact dollar earnings as the country battles against its
worst currency crisis in decades.

Oil traders said that the news had not led Pertamina to look
for any product supplies in the spot market.

While it would mean more supply of crude into the market,
traders were bullish that trading differentials would not be
hurt.

The shut down was expected to push more heavy crudes into the
March market, but ample buying interest was likely to support the
price, crude traders said.

Balongan processes mainly heavy Duri and Minas crudes.

"There may be extra Duri available, although we haven't seen
any barrels yet apart from the allocations," said a trader with a
major oil company.

"But the last trades were at high premiums, and I think these
can still hold," he said.

In recent weeks light crude grades have been falling in price,
but heavier grades have found strong support.

Traders said they estimated that Indonesia had not made any
oil product imports in February.

Pertamina rolled into March term deliveries that were
scheduled for February of 135,000 tons of gas oil and kerosene
from Kuwait.

But traders had also said that Indonesia was not planning to
import fuel oil in February or March either. It normally imports
around 200,000 tons per month.