Pertamina seeking tanker to store LSWR

State-owned oil and gas company Pertamina is planning to charter an Aframax tanker to store low sulfur waxy residue from its Cilacap refinery, traders told Dow Jones Newswires on Thursday.

Pertamina last week inquired about the time-charter of an Aframax tanker as well as a Very Large Crude Carrier, shipbrokers said.

Aframax-type tankers carry between 80,000 metric tons and 120,000 tons of oil products.

Following the shutdown last month of a secondary unit at the 348,000-barrel-a-day Cilacap refinery, Pertamina had offered straight-run low sulfur waxy residue for export, traders said.

But the straight run LSWR isn't drawing buying interest because of logistical constraints as lifters "can only load one 200,000-barrel cargo at any one time from Cilacap terminal," trader said.

In Balikpapan lifters can load larger LSWR cargoes in sip-to-ship transfer operations, to save on shipping costs through the deployment of larger tankers.

With a floating storage vessel, Pertamina can offer its lifters larger cargo lots, a trader said.

Pertamina has had a difficult time trying to sell its straight-run LSWR owing to draft ant other logistical constraints at Cilacap, which has traditionally not only been a LSWR supply resource.

The shutdown of Pertamina's Balongan refinery in February restricts use of the straight-run material for further processing domestically.

According to a Pertamina formula, straight-run is valued at a 75-cents/bbl premium to the mixed/cracked LSWR Indonesia typically exports.

Owing to the recent surge in Indonesia's LSWR export availability, Pertamina is planning to blend the straight-run material with mixed/cracked LSWR to attract more buyers.

As a result, premiums for mixed/cracked LSWR are expected to fall below 50 cent/bbl, level against Pertamina's price formula, traders said.

Pertamina's February LSWR export allocation is expected to rise to 3.99 million barrels, up from 2.53 million barrels in January. (*)