Indonesia to Import Iranian Crude Oil
Pertamina President Baihaki Hakim said the company might switch its crude supplier for the Cilacap Refinery from Saudi Arabia to Iran because of the latter's cheaper price.
Baihaki said that a deal with Iran would require Pertamina to purchase at least between four to six cargoes of crude. One cargo consists of some 1.8 million barrels of oil, he explained.
Saudi Arabia's state oil company Aramco, he said, supplies Cilacap with crude under a long term contract of six months.
He said that Aramco supplies Cilacap with some 120,000 barrels of oil per day (bpd), which is 3.6 million barrels per month.
"So a purchase of 7.2 million barrels of oil (four cargoes) should be good enough for a couple of months," he said.
"As of now, we're still in negotiation with Aramco and the National Iranian Oil Company," he told newsmen at the sidelines of a hearing before the House of Representatives Commission for Environmental, Science and Technology Affairs.
The hearing was held to discuss details of the new oil and gas bill with Pertamina and the Ministry of Energy and Mineral Resources.
Baihaki said that a deal with Iran would require Pertamina to purchase at least between four and six cargoes of crude. One cargo consists of some 1.8 million barrels of oil, he explained.
According to him a deal with Iran could be expected by the fourth quarter of this year at the earliest.
Asked whether Pertamina sought to replace all of Aramco's crude supply to Cilacap, he said, "Not just yet; finding oil out there isn't easy.
"We'll have to talk this over with Aramco; They have been our partners all this time. Yes, some people say their oil is too expensive, but that's negotiable."
He added that the cheaper Iranian oil doesn't necessarily mean it meets Cilacap's requirement.
"Cilacap's design spec (specification) is for Arabian light oil, so we must be careful," he said.
Baihaki explained that the crude from Aramco supplied to Cilacap produces the right proportions of fuel products like kerosene, premium gasoline and diesel oil for Indonesia's needs.
Changing the type of crude oil could cause their proportions to alter, he said.
"Indonesia needs premium gasoline, solar and kerosene. That's our priority; If we lack these we must make up for the shortfall through imports," he said.
The Cilacap Refinery has two distillation units which have a combined monthly production capacity of 1.7 million barrels of premium gasoline and 1.98 million barrels of automotive diesel fuel.
Pertamina, Baihaki said, was studying the possibility of Iranian crude replacing Saudi Arabian light crude at Cilacap.
The company had also sent a delegation to Iran for further talks on this matter with the NIOC.
He said that earlier, the Iranian government had offered Indonesia the opportunity to purchase its oil directly from the country.
The idea to purchase crude from Iran resurfaced after Baihaki was informed about a local company proposing to arrange a deal with Iran.
The company, whom Baihaki identified as the Setco Group, led by businessman Setiawan Djodi, charged a service fee of 10 U.S. cents per barrel on top of the oil's market price.
He explained that such oil brokerages were normal in dealing with Middle East oil producers, where a direct approach was sometimes ineffective.
But Baihaki said he rejected the proposal, as Iran had already offered to sell its oil directly, without an intermediary.
"If we can buy the oil directly and more cheaply, why should we waste our money on third parties?" he said.
Nonetheless, he said, the proposal reminded him to ask whether Iran's offer was still valid, upon which Iranian officials said they had not backtracked on their offer.
According to Antara, apart from importing fuel to cover shortfalls in supplying the market directly, Pertamina also relies on imported crude oil to feed its refineries.
Fuel output from Pertamina's refineries averages some 880,000 bpd, as against national consumption of 1.08 million bpd. To make up for the shortfall, pertamina imports fuel at a cost of around us$1.75 billion per year.