Pertamina will import 950,000 barrels of oil per month from the US between February and June 2020. (Antara Photo/Aprillio Akbar)
Pertamina to Triple Oil Import From the US Next Year
BY :AYU RETNANINGTYAS
NOVEMBER 26, 2019
Jakarta. State energy company Pertamina is seeking to triple its crude oil import from the United States next year, taking advantage of the competitive price of US oil to meet baseload demand of its refinery in Cilacap, West Java, a senior executive of the company said on Tuesday.
Pertamina will import 950,000 barrels per month from the US between February and June 2020, totaling to an order of 4.75 million barrels, said Hasto Wibowo, Pertamina's senior vice president of supply chain. That amounts to a 265 percent increase from this year's import of 1.3 million barrels.
Indonesia is among countries enjoying a surplus in trade with the US, placing it squarely in President Donald Trump's sight.
The US president has been desperately wanting to reduce the US trade deficit.
Indonesia and the US are now locked in a bilateral trade negotiation as the Trump administration is reviewing preferential trade treatments that if canceled may hurt Indonesia's exports.
A big order made to US oil producers would not hurt Indonesia's chances in the negotiation.
Pertamina had just began importing crude oil from the US this year, with the first shipments coming in June and November, Hasto said on the sidelines of the Pertamina Energy Forum 2019 in Jakarta.
It takes 90 days to deliver oil from the US, making imports from the country costlier than buying from African countries, who deliver in 50 days, or countries in the Middle East, who deliver even faster in just 30 days.
But burgeoning shale drilling in the past decade had turned the US into a net oil exporter last year, a status the superpower last held 75 years ago.
Oversupply among US oil producers today makes their price more competitive than those of their African or Middle Eastern competitors, Hasto said.
"The main goal here is to capture potential arbitration opportunities. If there is a lot of supply, freight costs can be covered. They [US oil producers] can sell to the Far East, to Japan and Southeast Asia [including Indonesia]. We can shop around," Hasto said.
A drastic increase in oil import from the US will not result in a corresponding increase in Pertamina's total oil import, Hasto said. It will only mean that Pertamina may cut back on buying oil from other sources in the first six months next year.
In the meantime, Pertamina still has not decided where it will buy oil to supply its Cilacap refinery in the second half next year. "We'll start looking in May," Hasto said.