PERTAMINA SEEKS TO IMPORT 132,000 TONS OF LPG FROM IRAN

March 23, 2016, Jakarta Post

Indonesia hopes to import up to three cargoes, or about 132,000 metric tons, of liquefied petroleum gas (LPG) from Iran in the second half of the year.

Pertamina Integrated Supply Chain’s (ISC) vice president for crude product trading Hasto Wibowo said that since the sanctions on Iran, one of the world’s biggest oil producers, had been lifted, Pertamina had been in talks with the National Iranian Oil Company (NIOC) for supplies of crude oil, condensate and LPG.

“We are serious about Iran’s LPG, and we are currently exploring banks that can be appointed for transactions, as US dollars still cannot be used,” he told a press conference on Friday.

The international sanctions against Tehran were officially lifted in January after the UN nuclear watchdog — the International Atomic Energy Agency (IAEA) — released a statement saying that Iran had fulfilled all the measures required under its deal with six world powers.

Since the international sanctions were lifted, many major oil companies have expressed their enthusiasm about getting involved in oil and gas exploration in Iran.

Last month, a government-to-government meeting was held in Bogor, West Java, in which the two countries agreed to cooperate in the upstream oil and gas sector and in the exchange of data and technology.

According to the Energy and Mineral Resources Ministry, Iranian crude oil would meet the specifications needed for Indonesia’s Cilacap and Balongan refineries, supplies for which are now mostly met by Saudi Arabian oil.

The two countries have made previous attempts to secure a partnership, but any deal eventually fell through due to the international sanctions on Iran.

Indonesia, which recently reactivated its membership of the Organization of the Petroleum Exporting Countries (OPEC), needs to secure long-term and inexpensive crude oil and petroleum products to meet domestic demand.

The country’s domestic production has declined in recent years and can only meet half of the total demand. Consequently, the country has relied on substantial imports of crude oil and petroleum products.

Pertamina has predicted that Indonesia’s LPG consumption would amount to 7 million tons in 2016, up from 6.3 million tons last year, of which 4.17 million tons, or 64.8 percent, was supplied by imports.

Iran is not the only country Pertamina is pursuing imports from. Hasto said that the company, through government-to-government and business-to-business contact, was also trying to seal deals with six other countries: Iraq, Nigeria, Libya, Russia, Angola and Azerbaijan.

“We are especially interested in countries that have recently had their sanctions lifted. Notably, Iran and Libya,” he said.

According to Hasto, Indonesia currently buys 700,000 barrels of crude oil per month from Iraq. However, Pertamina hopes to pursue a crude processing deal with Iraq, as the company’s eight refineries were running almost at full capacity, creating a need to have crude oil processed abroad.

Pertamina is considering renting one of India’s refineries, as the cost per barrel was lower than other refineries abroad. However, Hasto emphasized that no deal had been made yet.

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