Pertamina to sell low-sulfur diesel

PT Pertamina, Indonesia's state oil and gas company, will start selling low-sulfur diesel in the domestic market in March 2007 because of a government order to supply cleaner-burning fuel, The Jakarta Post reported on Saturday citing Bloomberg.

Indonesia's Ministry of Energy and Mineral Resources informed Pertamina and other oil companies in March that they must cut sulfur content in diesel to 0.35 percent from 0.5 percent, Mohammad Harun, a Pertamina spokesman, said on Friday.

Indonesia, the second-smallest member of the Organization of Petroleum Exporting Countries by output, imports about a third of its oil products each year because its daily refining capacity of 1.06 million barrels isn't sufficient to meet domestic fuel demand.

"The government has given oil companies a year to meet the new requirement," Harun said. Pertamina imported about 100 million barrels of fuels in 2005 through annual supply contracts and monthly purchases from traders and refiners, he said.

Kuwait Petroleum Corp. is the largest supplier of diesel, or gasoil, sold through annual contracts to Pertamina. The Indonesian state oil company has contracted to buy 21.6 million barrels of the fuel from Kuwait this year.

Oil traders such as Vitol Group, Trafigura AG and Glencore International AG also supply diesel to Pertamina through so-called spot purchases. (*)