Pertamina cancels plan to import Rusian diesel oil

Pertamina has decided to cancel its plan to import diesel oil from Russia after its supplier failed to meet the terms and conditions required by the state-owned oil and gas company, Investor Daily reported on Thursday.

Pertamina's commercial director Ari Soemarno said in Jakarta on Wednesday that Pertamina and the Singapore-based WVC Petroleum signed a memorandum of understanding (MOU) agreement in August, last year on the import of the diesel oil from Russia.

Under the initial agreement, Pertamina would import about 600,000 barrels of diesel oil a month from Russia through the Singaporean company for at least three years. Pertamina said that the import of the Russian diesel oil would enable it to save at least Rp 1 trillion a year, because the price offered by WVC Petroleum was relatively lower than the price in the market.

However, the deal had raised some questions because the supplier was relatively unknown in the oil market. This had prompted Pertamina to propose stricter terms and conditions but WVC Petroleum failed to meet the request.

At present Pertamina imports about 190,800 barrels of diesel oil per day, 67,300 of petroleum a day and about 29,000 of industrial diesel oil per day to meet the shortage of refined oil supply from the local refinery plants.

Pertamina's plants produce about 800,000 barrels of oil per day, much lower than the demand which reaches between 1.1 million and 1.2 million barrels per day. (*)