Pertamina to import LGP from Mideast, Thailand, Australia

Ika Krismantari, The Jakarta Post, Jakarta

State-owned oil and gas firm Pertamina will import some 1.5 million tons of liquefied petroleum gas (LPG) from Qatar and the United Arab Emirates in 2009 to support the government's campaign to gradually replace highly subsidized kerosene with natural gas.

Pertamina marketing and trading director Ahmad Faisal said here Friday that the contract for the LPG imports would soon be signed with Japan-based Ithocu Group, which has been appointed agent for the LPG purchases

Ahmad added that Pertamina was also in talks with the Autralian unit of BP and a Thai company to help meet Indonesia's LPG requirements, which are expected to amount to 3.9 million tons a year by 2010.

Rising LPG imports are inevitable if the government's kerosene-to-LPG conversion program is to be feasible as the country's LPG production is not sufficient to meet domestic demand. At present, about 20 percent of the country's LPG needs, which amounts to about 1.5 million tons a year, is imported.

After being delayed for several months, the program appears to now be back on track. Pertamina has designated 11 companies to supply gas stoves as part of the program.

The gas-stove scheme, which should have commenced in January, was delayed as the companies taking part in the tender for the procurement of the gas stoves failed to meet the requirements.

Pertamina has allocated Rp 200 billion (US$21 million) for the procurement of 4.17 million LPG stoves as part of the scheme, which is expected to be launched next month.

According to the government's estimate, the kerosene-to-LPG conversion program will save up to Rp 21 trillion annually.

One kilogram of LPG is more or less equal in energy content to three liters of kerosene. Pertamina, the only LPG distributor in the country, sells LPG at Rp 4,250 per kg, while heavily subsidized kerosene costs Rp 2,000 per liter.