Pertamina starts buying crude oil from local market

State owned oil and gas company Pertamina has begun to buy crude oil from local oil producers to meet the crude oil needs of the company's oil refinery plants, Koran Tempo reported on Friday.

Pertamina's marketing director Ari Soemarno said in Jakarta on Thursday that the company had signed a contract to buy crude oil of 250,000 barrels from Beyond Petroleum (BP) at a market price, beginning this month.

"We are still assessing the possibility to buy crude oil from other producers," he was quoted as saying. He said that other producers such as Chevron Pacific Indonesia and Conoco had also expressed its interest to sell part of their crude oil production to Pertamina.

The deal to buy crude oil from local producers is possible after the ministry removed restrictions imposed on Pertamina to buy crude oil from the local market. Pertamina was previously prohibited to buy crude oil from local market due to problems in calculating the subsidy to be provided for the fuel sales.

According to Pertamina, the purchase of crude oil from local producers can save transportation costs of about US$7 per barrel or about US$52 million a year. (*)