RI oil-product imports seen slowing in 1998

RI oil-product imports seen slowing in 1998

SINGAPORE (Reuters): Indonesia's petroleum product imports are expected to fall in 1998 due to an increase in the country's refining capacity and a slowdown in consumption, industry sources said yesterday.

The sources said Indonesian authorities would also try to keep a lid on imports to keep down costly U.S. dollar expenses as the country grapples with the fall in the value of the rupiah.

Industry sources estimated that imports of the three key oil products--diesel, jet-kerosene and fuel oil--would decline by about five percent over 1997 levels.

"There must be a direction from the finance ministry for state-run companies to reduce U.S. dollar expense," one industry source said.

State-owned oil monopoly Pertamina imported 71.8 million barrels of fuel products in fiscal 1996/97 (April-March).

"I think imports in 1997/98 will be about the same as the previous year," one Pertamina official said.

Traders said Indonesian imports in the first eight months of the fiscal year to November were well above the previous period, largely because more imports were needed to cover lost production during a series of refinery shutdowns going back to July.

But now that the refineries are back in operation, with expanded production capacity, imports for the next four months should be below the monthly average, they said.

Traders estimated monthly diesel purchases, the largest product imported, would fall to around three million barrels from an average of four million barrels.

Diesel imports peaked at over seven million barrels in October, which compared with the past four month imports averaging at a high five million.

The large imports were due to the shutdown of several refineries for regular maintenance and refurbishments.

As a result of the upgrading work, Indonesian refining capacity has grown to 1.05 million barrel per day (bpd) from 989,000 bpd.

Industry sources said that aside from the supply surge, a fall in demand was also anticipated next year because of a slow down in the Indonesian economy.

The austerity measures imposed by the International Monetary Fund as a condition on its initial US$23 billion bail out package will lead to stagnant oil demand growth in 1998, one trader said.

Oil product consumption was forecast by traders to grow between four and five percent in 1998.

Indonesia's economic growth is expected to slow to between 5-6 percent in the fiscal years 1997/98 and 1998/99, planning minister Ginandjar Kartasasmita said on Monday.

The economy was originally expected to grow by more than seven percent.

The sources said Indonesia's long term target to optimize jet- kerosene and diesel production at all its refineries would also eat into imports.

Indonesia is currently processing more of its own crude and is cutting back on imports as part of the IMF austerity measures and an earlier internal decision by Pertamina to reduce its reliance on outside sources.

Traders said the first crude imports that will be cut are those that yield less jet-kerosene and diesel.

Indonesia currently exports around 760,000-800,000 bpd of crude and imports about 200,000 bpd of Middle East, Malaysian and Australian crudes.