Indonesia's Pertamina receives first license to export gasoil

Indonesia's Pertamina receives first license to export gasoil

Indonesia's Pertamina [PERTM.UL] has received a license from the government
to export gasoil for the first time, three sources close to the matter said
on Monday, although the state oil company is planning to prioritize domestic
sales if possible.

Pertamina is typically an importer of gasoil, as diesel is called in most
Asian markets, but inbound shipments have declined over the years as it
ramped up refining output and demand from the mining sector slowed.

With other gasoil sellers - such as Royal Dutch Shell, Exxon Mobil Corp and
Solaris Prima Energy - crowding into the retail market, and an increased
biodiesel mandate in 2016 reducing conventional consumption, Pertamina's
supply of the fuel has also outperformed demand, said Toharso, director of
refineries at Pertamina, who goes by one name.

If Pertamina exports its surplus fuel, it would help ease supply tightness
in Asia caused by Tropical Storm Harvey, which drove up the Asian gasoil
margins to a one-and-a-half month high, traders said.

The company, though, is also taking steps to sell more gasoil into its
domestic market by asking the government to grant it a monopoly on diesel
imports, which would force the other retailers to buy from Pertamina.

The state oil company received the gasoil export license two to three weeks
ago, and it is developing a standard operating procedure on how to export
the cargoes, the sources said.

Still, "we will try our best to sell in the domestic market," Toto Nugroho,
senior vice president at Pertamina for integrated supply chain, told
Reuters.

But if market competition means storage inventories build up, "the last
resort is to export," he said.

Pertamina declined to give details on possible export volumes or a timeline
of shipments.

LOBBYING FOR IMPORT MONOPOLY

Pertamina supplies about 70 percent of Indonesia's gasoil needs, while
private firms supply the rest, Toharso said.

Many of the private firms import their gasoil, but Pertamina is lobbying
Jakarta to name it the country's exclusive importer of the fuel, a move that
would alleviate the state oil company's surplus and possibly negate its need
to export the fuel.

"Pertamina is encouraging the Energy Ministry to make other companies not to
import gasoil and just buy it from Pertamina," said Toharso.

Indonesia's Energy Ministry did not address a Reuters query asking if it
will approve Pertamina's request.

Dadan Kusdiana, a spokesman for the ministry said it will "encourage
(retail) companies to purchase from Pertamina first before they import."

"Pertamina has also sent an offer letter to other (retail) companies that
need gasoil," Kusdiana said.

But the prices offered by Pertamina are higher than buying from the
international market, said a buyer who declined to be named as he was not
authorized to speak with media.

"We can easily absorb the cargoes as long as the price is competitive," the
buyer said.

Toharso said the prices were negotiable.

Nearly two-thirds of Indonesia's gasoil is used in its transport sector for
commercial vehicles, which is expected to grow at 3 to 5 percent this year.
The rest is used in the country's industrial and mining sectors.

Solaris Prima Energy is a subsidiary of China-owned trader Unipec Singapore,
whose parent company is Asia's top refiner Sinopec Corp.

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Link to Original Article:
https://www.reuters.com/article/us-indonesia-gasoil-exclusive/exclusive-indo
nesias-pertamina-receives-first-license-to-export-gasoil-sources-idUSKCN1BF1
CH

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com