PT Pertamina plans to import crude oil from the United States (US) as much as 4.75 million barrels by 2020 - Photo: Pertamina

JAKARTA (TheInsiderStories) – State-owned energy holding firm, PT Pertamina plans to import crude oil from the United States (US) as much as 4.75 million barrels (Mbbl) by 2020, jumping 265.4 percent from this year target’ 1.3 million barrels. The imports will be conducted for five months period, from February to June, 2020, with a volume of 950 thousand barrels per month.

Speaking at the 2019 Pertamina Energy Forum on Tuesday (11/26), Pertamina’ official Hasto Wibowo said, the company began importing crude oil from the US in this year for two shipments in June and November.

“In the period of February to June is 950 thousand barrels per month,” said Wibowo, adding the oil imports were carried out to cover the needs of the Cilacap Refinery.

As for the crude oil supply in the second half of 2020, according to Wibowo, Pertamina does not have a purchase contract yet. He adds, “Well, the need for July crude oil is there, up to six months, we are looking for more starting May.”.

In April 2018, US’ President Donald Trump administration expressed disappointment over its high trade deficit with Indonesia and announced that it would review the Generalized System of Preferences (GSP) facility for Indonesia.

GSP is a trade preference program that offers import duty exemptions for products from developing countries to promote economic development in the beneficiary countries.

Coordinating minister for economic affairs, Airlangga Hartarto, weeks ago, stated that the Washington would maintain Indonesia’ GSP facility on the condition that the country fulfilled its requirement to make consistent regulatory adjustments.

Indonesia’ 2018 trade surplus with the US was $9.67 billion, up 9.89 percent from the $8.84 billion trade surplus in 2017. The country’ trade surplus with the US grew from 2014 to 2018 at an annual rate of 8.47 percent.

At the same event, CEO of Pertamina, Nicke Widyawati, noted the rotation of the oil and gas industry has become a central issue for the company. Therefore, Pertamina needs to do some steps to shifting the businesses, she said.

“Demand is changing, consumption patterns are changing. There are also environmental factors. We need strategic steps to deal with it,” she said.

Pertamina, she went on, has carried out various initiatives to to reducing the imports. One of them is the Refinery Development Master Plan and Grass Root Refinery mega projects to the coal gasification project with PT Bukit Asam Tbk (IDX: PTBA).

The holding company also enter the biodiesel business and has implemented the 30 percent biodiesel use (B30) starting Nov. 21, 2019. This significantly reduces imports, she adds.

While, energy and mineral resources minister, Arifin Tasrif, asserted, that the government would cooperate with Pertamina to raise the capital inflow into the country to help the exploration activities, oil and gas production, and develop oil and gas infrastructure to fulfill the demand.

“The role of oil and gas is very important in the midst of increasing domestic demand,” he said.

Mid of this year, President Joko Widodo criticized his ministers due to the country’s widening current account deficit (CAD). Based on Bank Indonesia data, in the third quarter (3Q) of 2019 the deficit recorded $7.7 billion, equivalent to 2.7 percent of the country’s gross domestic product.

The head of state criticized his minister performance who were considered to be not maximal enough to overcome national economic problems, especially about imports and exports.

“We need to look at the figures obtained by the statistics agency’ data. This is careful, which is related to exports and imports,” said Widodo in July.

Widodo asked the ministers to look at the figures and question why the value of imports was so high. He insinuated the relevant ministers to fix this problem. Starting from the energy and mineral resources minister, state-owned enterprises minister, to the investment coordinating board.

Besides the matter of exports and imports, Widodo also mentioned investment. The president reminded that he had said dozens of times that investments related to exports, investments related to import substitution, must be granted as soon as possible.

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