RI, Thailand to boost economic ties

RI, Thailand to boost economic ties

BANGKOK (Agencies): Indonesia and Thailand signed a raft of cooperation agreements on Monday covering natural gas, oil, rubber and fisheries during a flying one-day visit by President Abdurrahman Wahid.

"We reached agreements on Monday on natural gas, on oil, on rubber and fisheries," the Indonesian president told reporters after a meeting with Thai Prime Minister Thaksin Shinawatra.

Speaking at the combined press conference, Thaksin said the foreign ministers of both countries who signed the agreements would spend the rest of the day working on the details of the cooperation.

"The ministers of both countries will work together from this evening until tomorrow ... For example, natural rubber cooperation, also the fisheries agreement that Indonesia will allow Thai fishermen to do fisheries in Indonesian waters," he said.

Thailand, with excess oil refining capacity, also agreed in principle to process up to 200,000 barrels per day (BPD) of crude oil for Indonesia.

Thaksin said he and the Indonesian president had agreed Thai refiners could help meet demand for oil products in Indonesia, which has insufficient oil refining capacity.

"Indonesia produces about 1.4 to 1.5 million barrels per day, but the capacity to refine in Indonesia is a little less than one million barrels (per day)," Thaksin added.

"To refine the rest of the crude, we have to find somewhere to do the refinery and Thailand does have excess capacity so it meets the requirement of both of us," Thaksin said.

"Roughly, we probably can take about 200,000 barrels a day from Indonesia to refine here, but we have to work out details."

John Russel, managing director of Bangkok-based consultancy Petroleum Economics Ltd (Pacific) said the deal appeared to make sense as Thailand had an excess refinery capacity of about 150,000 bpd.

"The deal will benefit both countries," he said. "Thailand can utilize some of its excess capacity while Indonesia can reduce its dependence on the spot market which would otherwise push up prices."

Indonesian state-owned Pertamina oil company had a crude processing deal with Shell Singapore that ran from October until the end of March for up to 90,000 bpd.

Abdurrahman was in Bangkok for a one-day official visit to discuss various bilateral economic issues including the crude deal and possible barter trade for other products.

Thai officials said both sides needed to work out more details of the oil deal, Thai officials said.

"We have only agreed in principle today. We will have to work out later on details such as volume and type of crude," Thai Industry Minister Suriya Jungrungreangkit told reporters.

Thailand has six refineries with a total estimated capacity of 945,000 bpd but the country consumed only 602,000 bpd of oil products last year.

Thaksin later told reporters the potential Thai refiners for Indonesia's crude were state-run Thai Oil, Bangchak Petroleum Plc and a subsidiary of debt-ridden Thai Petrochemical Industry Plc.

A PTT source working on the deal told Reuters last week it was likely that crude being imported by Indonesia from the Middle East would be refined at PTT's refining affiliate, Thai Oil Plc, in Thailand before it was shipped to Indonesia for domestic use.

Indonesian sweet crude meanwhile, was expected to be refined in Indonesia and shipped to Japan, where Indonesia could sell it at a premium price, the PTT source said.