Pertamina to spend $200m for fuel storage terminals

Alfian, The Jakarta Post, Jakarta | Fri, 12/26/2008 11:21 AM  

PT Pertamina plans to spend at least US$200 million next year to upgrade two of its storage terminals to support its distribution network, after the state oil and gas firm was reappointed as the sole distributor for subsidized fuels for 2009. 

About $130 million of the planned investment will be spent completing the construction of a storage terminal in Tuban, East Java, and the remaining US$70 million on a storage terminal in Bau Bau, South East Sulawesi, Pertamina's marketing and trading director Achmad Faisal said Wednesday. 

He said the terminal in Tuban would have a 250,000-kiloliter capacity. 

"Construction has begun and we expect to complete the terminal by the end of 2009," Faisal said. 

The storage in Bau Bau will have a 90,000-kiloliter capacity and was designed to secure fuel supply to the eastern part of Indonesia. 

"The terminal project will begin next year and is expected to be completed in 2010," Faisal said, adding that the two projects were part of the company's effort to secure fuels distribution to the public. 

Earlier in the week, Pertamina was officially selected by the government to distribute subsidized fuels for next year, beating out 27 other tender participants, including Shell and Petronas. 

"Pertamina in general is the company most ready to distribute subsidized fuels across the nation," chairman of downstream oil and gas regulator BPHMigas Tubagus Haryono said. 

The 2009 state budget has capped the subsidized fuels quota at 36.85 million kiloliters. The quota will include 19.40 million kiloliters gasoline Premium, 5.80 million kiloliters kerosene and 11.61 million kiloliters diesel. 

Under existing regulations, the government reimburses the distributor under the so-called MOPS plus alpha formula. MOPS, or Mean Oil Platts Singapore, is the average monthly price of oil transactions in Singapore, and alpha is the margin of distribution and profit. 

The House of Representatives and the government has set in the 2009 state budget that the alpha percentage for next year will be 8 percent of MOPS, down from 9 percent this year. 

Pertamina president director Ari Soemarno said Pertamina would not receive profits from the distribution of subsidized fuels with alpha set at 8 percent. 

Based on the assumptions that oil cost $50 a barrel, the dollar at Rp 11,000 and the alpha at 8 percent, Ari said, Pertamina would even suffer a loss of about Rp 2 trillion. 

With the same assumption on oil prices and the rupiah, Ari said Pertamina would reach a break-even point only if alpha was set at 12.5 percent.