PT Pertamina booked US$2.53 billion during last year, lower than $2.54 billion in 2017. Photo: Privacy.

JAKARTA (TheInsiderStories) – Indonesia’ state oil and gas firm PT Pertamina said its crude oil imports in the first half (1H) this year fell 35 percent to 220,000 barrel per day (bpd), compared to 339,000 bpd in 2018, the company said in a statement on Tuesday (08/13).

The lower imports were due to increasing domestic purchases from other oil contractors in Indonesia, the statement said. Until August 2, 2019, Pertamina agreed to buy 123,600 bpd of crude oil from 39 oil contractors operating in Indonesia.

Pertamina Corporate Communication VP Fajriyah Usman explained, the total agreement for the purchase of crude oil and condensate from domestic increased greatly significant compared to 2018.

“Of the total volume, we optimize the supply in accordance with the needs, types, and volumes, as well as business agreements that reached. This had an impact on the decline in Pertamina’s crude oil imports. As seen in the January-June period, Pertamina’s crude oil imports were recorded at 220 bpd,” he added.

Usman noted, the composition of imports compared to domestic lifting which amounted to 681 bpd reached around 25 percent compared to 75 percent. The condition is improved compared to 2018 where the ratio is 37 percent (339 bpd) of imports and 63 percent (571 bpd) domestic.

Pertamina also succeeded in suppressing imports of fuel products such as Avtur and Solar. With the innovation for refinery optimization, since May Pertamina has been able to meet the domestic needs of Avtur and Solar from the production of refineries themselves.

“This is certainly an achievement to encourage the fulfillment of domestic needs from the resources we have. Even the Avtur production from the Cilacap Refinery is now exported overseas because all domestic aviation fuel needs have been met,” he added.

The Indonesia government since last year required oil contractors operating in the country to prioritize Pertamina as a buyer for their uncontracted crude output.

As known, the government issued Energy and Mineral Resources Ministerial Regulation Number 42 the Year 2018 concerning the Priority of Petroleum Utilization to Fulfill Domestic Needs, in which Pertamina and Business Entity Holders of Petroleum Processing Business Permits must prioritize domestic oil supplies.

Meanwhile, contractors or affiliates are required to offer petroleum parts to Pertamina or the Business Entity of Petroleum Processing Business License Holders.

With the existence of this policy, Pertamina can help reduce the domestic imports, so as to have an impact on strengthening the country’s foreign exchange reserves.

The decline in oil imports is in line with Pertamina’ previous commitment to reduce the amount of oil and gas imports in a way that is more utilizing domestic oil production. This is in simultaneously with President Joko Widodo’ policy to regulate the use of non-subsidized 20 percent bio-content (B20) on Sept. 1, 2018. Currently, B20 program can save US$5.5 billion per year in fuel imports.

To increase palm oil consumption and reduce energy imports, Presiden Widodo yesterday announced to switch the mandatory B20 program to B30 to be in use by January 2020. The Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan has said that the implementation of the B30 program could help to reduce fuel imports of $3 billion.

The government has been ramping up efforts to boost domestic use of palm oil, the feedstock for its biodiesel, as the vegetable oil has seen sluggish demand due to import duties imposed by top buyer India and restrictions in European Union markets because of environmental concerns.

The government is currently conducting road tests for diesel vehicles running on B30 fuel. The country could consume up to 9.6 million kilolitres (kl) of fatty acid methyl ester, the palm content in the biodiesel, in 2020 with the B30 program, deputy energy minister Arcandra Tahar said days ago. That’s more than a 50 percent increase from an estimated consumption of 6.2 million kl this year.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

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