Pertamina agrees to pay higher for Kuwait's diesel supplies

State-owned oil and gas PT Pertamina agreed to raise the premium it pays Kuwait Petroleum Corp. for diesel supplies in the first half of 2007 by as much as 14 percent, officials involved in the negotiations said.

Bloomberg reported Thursday that Pertamina will pay a premium of $1.25 a barrel over the benchmark price for diesel with a sulfur content of 0.5 percent to be delivered to Teluk Semangka, on the island of Sumatra.

Pertamina will pay $1.65 a barrel more than the benchmark price for the fuel to be shipped to Situbondo, East Java, said company officials who asked not to be identified.

The premiums include shipping costs for 1.8 million barrels of diesel, or gasoline, containing 0.5 percent sulfur, in three cargoes which will be delivered by Kuwait Petroleum every month.

Pertamina and Kuwait Petroleum hold talks every six months to agree on the premium to be paid for the fuel. Kuwait Petroleum will supply 21.6 million barrels of diesel to Pertamina in 2007, unchanged from this year, officials said.

The benchmark price is based on the average assessments of oil-pricing services Platts and Argus Media in Singapore. (*)