Pertamina to stop LPG imports from 2007

State-owned oil and gas company PT Pertamina is planning to stop importing liquefied petroleum gas (LPG) from 2007 and will meet the domestic demand from domestic refineries owned by the firm as well as production sharing contractors (PSC), the Investor Daily reported Wednesday.

?Theoretically, if (oil and gas upstream sector regulator) BP Migas hands over all the LPG produced (by PSCs)to Pertamina, we don?t need to import LPG any more,? Pertamina?s deputy director of marketing and trade Hanung Budya said in Jakarta on Tuesday.

According to Hanung, if BP Migas agrees on the scheme, Pertamina will get additional one million tons of LPG from ConocoPhilips and PetroChina. In 2007, the domestic demand for LPG will reach 1.7 million tons thanks, a significant jump from 1.1 million tons in 2006. The government has luanched a program for households to shift from kerosene to LPG.

Last year, Pertamina got 850,000 tons of LPG from its own refineries, around 200.000 tons from PSCs? and 50,000 tons through imports. Pertamina has already sent a letter to BP Migas regarding the purchase of one million tons of LPG from ConocoPhilips and PetroChina (500.000 tons from each).

?The government already gave green signal,? Hanung said.

He is optimistic that both ConocoPhilips and PetroChina will not reject Pertamina?s request. ?We will buy from them with market price. It will be more better, if they sell to us,? he said.

But Pertamina, according to Hanung, is still suffering losses from the selling of LPG. Because it must sell LPG at a rate of Rp 4,250 per kilogram whereas its economic price is around Rp 6,000-Rp 7,000 per kilogram.

?This year alone, our losses will reach Rp 2 trillion,? he said. (*)