RI oil product imports surge again, say traders

RI oil product imports surge again, say traders

SINGAPORE (Reuters): Indonesia's oil product imports are creeping up again after it was crippled for months by the country's worst financial crisis in decades, traders said yesterday.

Traders estimate that Indonesia could import in May at least three million barrels of gas oil, 500,000 barrels of jet fuel and 50,000 tons of fuel oil.

Despite their higher spot imports, Indonesia has still not taken delivery of its last 600,000-barrel of gas oil cargo under a lapsed one-year term contract with Kuwait Petroleum Corp (KPC), a company source said.

"In total, I think they will buy around three million barrels of gas oil, with 2-3 cargoes of 200,000 barrels each on fob basis and five cargoes of 500,000 barrels each on c+f basis," said a trader with a western oil company which is a regular supplier to Indonesia.

"There is little doubt that they need the oil but the issue has been their ability to pay," another trader, with a oil major said.

"Oil is a basic ingredient for any economy."

Indonesian oil product stocks have been drawn down after its imports were stopped in February and March due to a severe foreign exchange crunch, traders said.

"Credit is not an issue anymore with International Monetary Fund (IMF) and recently Singapore's backing the economy and won't stop their purchases," a trader with a U.S. major oil company said.

Singapore Prime Minister Goh Chok Tong on Monday detailed a US$5 billion trade insurance scheme to guarantee Indonesia's imports from Singapore but it was not made clear how much would entail oil imports.

The trader confirmed selling a cargo of at least 200,000 barrels of gas oil to one of Pertamina's affiliates for end April lifting last week at around 10 cents premium to Singapore spot prices.

An Indonesian oil company source, meanwhile, declined to confirm nor deny rife market speculations on the country's purchases.

"Our buying volume is a bit sensitive in the current market situation and even if we say it, others may not believe it," a Perta Oil source said.

Perta and Indo oil, both affiliates of Indonesia's state owned Pertamina are responsible for the bulk of Indonesia's monthly imports of oil products.

The Perta source said that so far only around two million barrels of gas oil had been bought.

"It's up to traders to use their own judgment," the source said.

Traders said Pertamina affiliates have been sniffing around actively for fob Singapore cargoes and may have picked up close to 600,000 barrels of gas oil already.

In April, Indonesia was reported to have started imports again at around 1.5 million barrels of gas oil and 100,000 tons of fuel oil.

But some traders said that the amount of gas oil finally committed for April could have totaled three million barrels with some one million deferred to May.

This was still low compared to pre-crisis days when Indonesia would regularly purchase up to four million barrels of gas oil, two million barrels of jet fuel and 1.3 million barrels or 200,000 tons of fuel oil regularly on the spot market.