Import Azeri trigger additional costs

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Import Azeri trigger additional costs

Wednesday, 17 March 2010 08:27

Parliament question changes stipulation by the commissioner Pertamina imports

JAKARTA: The importation of crude oil from Azerbaijan Azeri Light as much as 2 million barrels to be done PT Pertamina (Persero) assessed the potential additional costs of fees.
Fee costs that arise because of imports for April 2010 delivery will be made through an intermediary company (trading company) which Socar Trading Singapore Pte Ltd, a company partly owned national oil company of Azerbaijan.
Based on documents obtained by Business, has made an offer Socar supply to Pertamina on February 1, 2010, through an official letter addressed to the Managing Director of Pertamina Karen Agustiawan.

Letter signed by the Managing Director of Socar Victor Lim said the company is ready to supply oil Azeri Light crude as much as 2 million barrels for Pertamina refinery needs.

Responding to this, the House of Representatives Commission VII Pertamina commissioner questioned the decision of changing the crude oil import trade without going through the state oil company.

Member of Commission VII of the Functional Groups Faction Satya W. Yudha rate that allows the commissioner acts crude oil purchases from the trader will cause additional costs that trigger swelling prices.

Parliament questioned the decision and asked Pertamina to import oil purchase process in a transparent and profitable state. "If by a trader, it is possible emergence of an additional fee," he said yesterday.

Based on business data, imports of crude oil into Balongan type Nile Blend has a lower price (about U.S. $ 3-US $ 4 per barrel) compared with the Azeri Light. (See graphic)

With a price difference of U.S. $ 4 per barrel, the overall import Azeri would cause additional cost of U.S. $ 8 million.

If the company's consideration to import directly to a trader based on the discounted price, go Satya, Pertamina should be able to directly approach the NOC to get discounted price.

In addition, said Satya, the purchase of crude oil directly from Pertamina to the National Oil Company (NOC) to strengthen relations between the two parties. "We just want transparency alone. Do not let the fact that import decisions hurt the country."

Not necessary

When confirmed, VP Corporate Communication Pertamina Basuki Trikora Son explained the agreement of crude oil imports by state-owned oil and gas exporter with the company, performed in the previous 2 months for delivery in the next 2 months. This is to ensure supply security in the country.

He said that the imports are of course taking into account the competitive price, good for the term or spot and in accordance with the specifications refinery.

"The time line, may be true that the company has filed. But sorry, I do not remember one by one company or a type of crude oil for April this acceptance period," he said.

According to him, with the average condition of national crude oil production is only range from 930,000 barrels per day (bpd), would not normally be able to meet the needs of the refinery company.

Yet the achievement of national production target of 980,000 bpd, he added, making Pertamina to import crude oil from various countries al Saudi Arabia, Malaysia, Vietnam, Brunei Darussalam, China, Africa.

Basuki explained imports, both crude and fuel oil can be done through term contracts and spot market by Petral, a subsidiary of Pertamina, the mechanism of an open tender in accordance with the requirements.

Besides, he added, imports through term contracts or spot by Petral, also can use the NOC, the International Oil Company, or through the company's traders. "So there is no provision that imports can only be done by the NOC alone," said Basuki.

Responding to the decision that allowed the company Pertamina to supply crude oil trading for delivery in April, the Director General of Oil and Natural Gas Ministry of Energy and Mineral Resources Evita Herawati Legowo reluctant to give information.

"It is a corporate business. Pertamina should ask it," he said.