Pertamina to increase LPG price beginning December

State owned oil and gas company Pertamina will increase the price of liquefied petroleum gas (LPG) in the domestic market beginning December, this year as part of the company's program to reduce financial loss from its LPG sales, Investor Daily reported on Tuesday.

General Manager of Pertamina's Gas Sales Department, A. Faisal, confirmed the plan saying the state oil and gas company was still calculating the amount of the increase and its timing.

According to him, in a bid to reduce the financial loss suffered by Pertamina from its LPG sales, the company planned to increase the LPG price in two stages. The first stage will be carried in December, and the second stage in January or February, next year.

Faisal said that with an assumption of average crude price of US$36 per barrel this year, Pertamina suffers a loss of Rp 820 per kilogram of LPG it sells. At present, Pertamina sells its LPG at Rp 3,000 per kilogram. The national demand for Pertamina's LPG reaches 1.5 million tons a year.

"Last year alone, Pertamina suffered a loss of Rp 800 billion (from LPG business)," he said.

Pertamina imports about 10 percent of its gas needs, and buys another 16.9 percent from production sharing contractors (local gas producers), in addition to its own gas production. (*)