IPA hints at PSC refusal to sell oil production to Pertamina

By Febry Silaban

The Indonesian Petroleum Association (IPA) hinted that the country?s PSC holders would not sell their oil and condensate production to state owned oil and gas firm PT Pertamina (Persero) to meet the firm?s refinery needs.

President of IPA Craig Stewart told Petromindo.com that under Indonesian PSCs, contractors have the right to freely lift and dispose of their oil and condensate production.

?Saying that though, Pertamina is free to bid in the open market for this production and the proximity of their refineries to the producing fields should enable them to be very competitive bidders,? he explained.

The Ministry of Energy and Mineral Resources has asked the country?s PSC holders to sell their crude and condensate production shares domestically, rather than export them, in order to meet the domestic needs. Exports of crude oil and condensate are estimated reach 400,000 barrels per day each year, 200,000 bpd of which can potentially be processed in domestic refineries. Should that happen, the government can save up to US$3.8 billion in foreign exchange reserves per year, according to the ministry.

Pertamina routinely imports huge volume of crude and oil products, spending billions of dollar each year in the process. This is one of the factors that put consistent pressure on the rupiah.

Editing by Johannes Simbolon