Uncertainty makes Pertamina slow in deciding crude processing

Pertamina is slow in deciding on an oil processing deal with a foreign refiner due to uncertainty over the Iraq situation, an official said on Friday, and has been buying petrol and diesel from the spot market, Reuters reported.

The Indonesian state oil firm had previously said it expected to refine 50,000 barrels per day (bpd) of crude oil for three months starting in June through such a processing arrangement.

Pertamina has been in discussions with refiners in Singapore since December. The company had a six-month crude processing pact with Shell Singapore, a unit of European oil giant Royal Dutch/Shell Group, that ended in March 2001.

"There are uncertainties about developments in the international markets. We are still evaluating crude processing abroad because crude prices are also still high," Pertamina deputy director for processing Asyhab told reporters.

"We are continuing to monitor the developments in the markets and we will take a very careful decision on this crude processing deal," he added.

Indonesia has five major oil refineries and several smaller plants with total capacity of about 1.0 million bpd, and have been operating at around 90 percent capacity in recent years.

Pertamina recently estimated Indonesia's oil products consumption would rise to 60.92 million kilolitres (383 million barrels) this year from an estimated 58.1 million kilolitres (365 million barrels) in 2002, with about 25 to 30 percent of the total imported.

Indonesia also covers the shortfall by processing crude oil at high costs in neighbouring countries that have excess refining capacity.

SPOT PURCHASES

To meet higher demand ahead of refinery shutdowns, Pertamina recently bought via tender 1.4 million barrels of middle distillates for April, and 890,000 barrels of gasoline (petrol), nearly twice as much as its March intake, traders said.

Asyhab also said Pertamina remained on track to carry out maintenance at some of its refineries, but was carefully watching events in the oil product markets.

"If something uncontrollable happens that affects our domestic supply... we may delay our refineries maintenance schedule," he said.

Pertamina has said it would shut its 200,000-barrel-per-day (bpd) Balikpapan refinery in East Kalimantan in March and April, the 125,000-bpd Balongan refinery in West Java in August and some units at Musi refinery in South Sumatra possibly in May.

Another Pertamina official said the company was expected to shut the 200,000-bpd crude distillation unit (CDU) at Balikpapan in the first week of April for 30 days for maintenance.

"Pertamina is expected to shut its CDU at its 200,000 bpd Balikpapan refinery (from the) first week of April for 30 days. The preparation will begin from the middle of March," the official, who declined to be identified, told Reuters.

Pertamina had said before that it would shut the Balikpapan refinery from mid-March for 60 days.

Clarifying the maintenance timeframe, the official said: "Other units in the refinery will also have maintenance. That means a need for a total of about 60 days. But for the CDU it is only for 30 days." (*)