RI, S. Korea studying oil barter deal

JAKARTA (JP): Indonesia is currently studying the possibility of bartering its crude oil and natural gas with South Korean commodities.

Minister of Mines and Energy Kuntoro Mangkusubroto said on Wednesday his ministry and the Korean industry and trade ministry were currently evaluating whether the countertrade deal was practicable.

"We are also studying when and how much crude oil and gas can be put up for the countertrade," Kuntoro said.

Reports of talks on barter trades between the two countries emerged during Kuntoro's meeting with his counterpart in South Korea last week.

South Korea's Ministry of Commerce, Industry and Energy said after the meeting that barter trade would be necessary to help foster the overall trade between the two countries.

It would include crude oil, mineral resources and gas products, the ministry said then, adding that representatives of the two governments would meet again soon to continue talk on details regarding the trade.

Earlier reports said that the South Korean government-owned Korean Gas (Kogas) was planning to cut several contracts to purchase liquefied natural gas (LNG) from Indonesia.

The reports cited no specific reasons for the contract cancellations, and Kuntoro said he had not been informed about the decision.

The minister denied that the barter trade plan was one of the country's last resort to maintain its trade relations with South Korea, another country almost as badly hit as Indonesia by the economic turmoil sweeping the region.

Common

He said countertrade was a common practice to tighten bilateral trade relations, and Indonesia had practiced similar trade systems in the past with other countries.

"We have been doing countertrade with other countries for a long time, such as with Russia and Kazakhstan," he said.

In Singapore, Secretary-General of the Asia-Pacific Countertrade Association David Hew, told Reuters that countertrade "is the flavor for the year and years to come."

Hew said currency volatility and extreme liquidity squeezes across the region had made countertrade more viable, and helped remove barriers to its growth.

It was the only logical alternative to the widely used U.S. dollar because the Japanese yen, another main currency used for international trade, was currently also weakening, he said.

Kuntoro also said on Thursday that the government would remove all subsidies on oil fuel and electricity tariffs "gradually and systematically" starting next year.

"All the subsidies will not be lifted instantly, we will do it on certain commodities first," the minister said. (das)