Petral wants to turn Bintan storage plant to commercial venture: Report

Singapore-based Pertamina Energy Trading Ltd, a wholly-owned subsidiary of state oil and gas company Pertamina, is planning to propose to its parent company that it turns the 1.5-million barrels Tanjung Uban clean storage facility in Bintan island, south of Singapore, into a commercial venture, sources close to Petral said Thursday as reported by Platts.

"If everything goes well, then we hope to begin operating the Tanjung Uban facility as an independent commercial entity in 2004," said the source.

The Tanjung Uban facility is currently used by Pertamina to store clean products. The facility currently has a jetty, which only accommodates up to 40,000 dead weight ton (dwt) ships. If the proposal is approved, Petral hopes to upgrade the facility to accomodate ships up to 120,000 dwt.

The Pertamina subsidiary hopes to also double the storage capacity to about 3-mil bbl if it takes over the facility. "This facility can offer blending facilities that the commercial storages in Singapore offer," said the source.

Some market players in Singapore welcomed this move because they felt this would lead to an increase in storage capacity in the region.

?Under current market conditions, particularly the distillates market, is in contango, and there will be an increase in the demand for storage, which is what is happening now," noted a trader.

Another trader noted, if the "Tanjung Uban terminal can be part of the FOB Singapore market then this will add to the existing storage facility." Traders noted that Petral because of lower land cost can offer more competitive storage rates than those offered in Singapore. Oil storage in Singapore cost between $0.50-0.60/barrel. (*)