Despite securing the government’s approval to export gasoil, state-owned energy giant Pertamina is in no rush to ship the fuel overseas as it may have to wait for the completion of its new refinery projects.
The government recently permitted the firm to sell gasoil, the term used for diesel in many markets in Asia, on the international market under the condition the latter met domestic demand first and had an excess supply
Pertamina will likely begin overseas shipment of the oil in 2025 after its refineries are ready especially because of the surging demand in the domestic market. It plans to expand the capacity of four of its existing refineries as wellfas build two new facilities in a bid to boost its refined oil production capacity to 2 million barrels per day (bpd) by 2025.
At present, Indonesian refineries, including those run by Pertamina, are only capable of producing around 830,000 bpd, a little over half the current fuel demand.
According to an estimate by the Energy and Mineral Resources Ministry, Pertamina’s Solar production will reach 916,000 bpd when all refinery projects arc finished in 2025, while domestic demand will only reach 620,000 bpd in 2024.
"As long as the domestic market can absorb our production, there is no urgency for us to export the gasoil,” Pertamina senior vice president for integrated supply chain Toto Nugroho told The Jakarta Post on Friday “We will only use the export option when our capacity is no longer still efficient.”
In fact, the sales of Pertamina’s gasoil products, namely the subsidized Solar and the non-subsidized Dexlite and Pertamina Dex, have followed an upward trend lately
The- company’s Solar sales rose by 13.65 percent year-on-year (yoy) to 10.8 million kiloliters (KL) in 2016. It also managed to sell 115,938 KL of Dexlite, introduced to the market in mid-April 2016, and 140,462 KL of Pertamina Dex, up 79.23 percent yoy This year,
total sales of the subsidized diesel from all distributors, including Pertamina, will increased by 12.75 percent to 15.5 million KL, according to the government’s estimate.
From January to July the firm’s refineries produced 90 million barrels of gasoil, or 53.25 percent ofthe full-year target. At the same time, it also generated 7.3 million barrels of diesel, Marine Fuel Oil (MFO) and Industry Fuel Oil (IFO), representing 34.9 percent of the 2017 target.
Downstream Oil and Gas Regulatory Agency (BPH Migas) fuel director Hendry. Ahmad predicted the local demand for diesel would remain high in the near future.
Pertamina might only' see a slight surplus in its gasoil supply if the government could effectively realize its 20 percent biodiesel blending (B20) policy he added.
“Pertamina will have an excess supply if it completes all its refinery projects, resulting in a significant jump in production that may surpass domestic demand,” Hendry further said.
Pertamina and petroleum and chemical distributor PT AKR Corporindo distribucy the blended fuel under the public service obligation (PSO) program. Despite the policy, however, domestic biofuel consumption only reached 1.67 million KI. in the Hrst half of this year, accounting for a mere 36.3. percent of the whole year target. Overall nationwide consumption stood at 3.65 million KL last year.
A further drop in domestic gas oil demand is expected when the government extends its biodiesel blending policy to 30 percent (B30) starting from 2020. ln the meantime, it 'is trying to encourage other retailers to buy gasoil from Pertamina instead of importing it themselves, a move that will help the company relieve its surplus.
“They [other retailers] should prioritize domestic supply [from Pertamina],” Energy and Mineral Resources Ministry oil and gas director general Ego Syahrial said.
Jakarta Post, Page-13, Saturday, Sept 9, 2017
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