RI seen to import less gas oil

RI seen to import less gas oil

SINGAPORE (Reuters): Indonesia may import less gas oil in May than previously committed, threatening to back out more supplies into the bearish Singapore market, traders said yesterday.

They said the delivery of previously committed gas oil cargoes into Indonesia have come under controversy as sellers distrust the country's credit.

"Many cargoes were committed long ago but operationally, they are now in question," one trader said. "Any letter of credit issued by Indonesia now may not be up to scratch."

Civil unrest in Indonesia and the meltdown of commerce and financing activities have made oil trade difficult to conclude, traders said.

Through its affiliated companies Perta and Indo Oil, Indonesia's state-owned oil company, Pertamina had purchased close to four million barrels of gas oil on the spot market in May, including one million barrels carried over from April, they said.

At least one western trader Marc Rich was said to be facing delivery difficulties.

Marc Rich was holding a cargo of gas oil loaded in Singapore over the weekend, but was unprepared to discharge into Indonesia without proper payment guarantee, they said.

A trader at Marc Rich declined comment.

But sources close to the company said that the 80,000- ton cargo of gas oil was expected to be worth at least $9.5 million under current market prices.

The dispute was likely to be over the late issuance of letters of credit (LC) or the LC may be backed by an Indonesian bank which was now unstable, they said.