Pertamina asks Thai firm to set cheaper crude processing fee

State oil and gas company Pertamina said Thursday it would only make a crude processing deal with Thai oil and gas company PTT if the latter set a lower processing fee than the refineries in Singapore.

"Crude processing deal with the Thai firm will only be feasible if it sets price lower price than (the refineries) in Singapore," Pertamina's president Baihaki Hakim told reporters following the signing ceremony of new oil and gas contracts at the ministry of energy and mineral resources.

He however did not explain why the Thai firm should set lower price than the refineries in Singapore.

Baihaki was commenting reports that the Indonesian and Thai governments signed on Monday various agreements, including crude processing agreement, to further strengthen bilateral trade ties between the two countries. The agreements were signed during President Abdurrahman Wahid's visit to the country.

According to the report, Thailand agreed in principle to process up to 200,000 barrels of crude oil per day (bpd) owned by Pertamina and ship the refined products back to Indonesia for domestic consumption.

Pertamina's officials said Pertamina and the Thai firm would further negotiate to reach a final deal.

Pertamina still imports fuel because its refineries could not meet all the country's demand.

Normally, the state company buys fuel from the spot market but late last year and early this year, when fuel prices soared on the spot market, it preferred making crude processing deals with several refineries in Singapore and Malaysia.

Baihaki said Pertamina would return to the spot market in June.

"We shall not make any processing deal in June because fuel price on the spot market will be cheap that month," Baihaki said.

He said Pertamina might start making new crude processing deal with refineries in two months from now. (Alex/Godang)