Pertamina to import LPG

Alfian, THE JAKARTA POST, JAKARTA | Wed, 03/11/2009 11:09 AM  

State oil and gas company PT Pertamina is seeking to import up to an additional one million metric tons of liquefied petroleum gas (LPG) per year,  an official says. 

The extra supply is needed to anticipate higher demand for LPG as the company intensifies the government’s kerosene-to-LPG conversion program this year, Pertamina’s deputy director for marketing and trading Hanung Budya told reporters on Tuesday. 

“We expect to distribute 23 million conversion packages this year. If we can achieve this target,  LPG demand will increase to more than 3 million metric tons. Thus, we will need a new supplier to provide us with between 500,000 to one million metric tons of LPG a year,” Hanung said. 

The nationwide conversion program was kicked off in December 2006 with assistance from Pertamina to phase out the use of kerosene  by households so as to cut government spending on fuel subsidies.  

Energy and Mineral Resources Ministry  data shows that  19,505,812 conversion packages  have  been distributed to households, and 877,691 to small businesses, between January 2007 and February 2009,  leading to an additional demand for 625,666 metric tons of LPG and replacing 2,232,718 kiloliters of kerosene. 

According to Hanung, LPG demand is currently at about three million metric tons a year, 2.2 million metric tons of which are to be supplied from domestic producers. 

Pertamina will also import between 800,000 and one million metric tons  of LPG this year from the Bermuda-based Petredec Limited oil company.  Pertamina signed a 10-year import contract with Petredec late last year. 

Hanung said Pertamina also wants the same contract period with another supplier that will be selected by the end of this semester. 

“We will hold a ‘beauty contest’ in the second semester of this year. We have been in talks with several companies, including one company from Abu Dhabi,” Hanung said without giving details about the company. 

According to Hanung, Pertamina would prioritize the supply of  LPG from domestic producers before deciding to import more from abroad. 

The government only subsidizes and fixes the price of the 3-Kg LPG canister, sold at Rp 4,250 (35.46 US cents) per kilogram. 

Pertamina also sells the 12-kg LPG canister and the 50-kg LPG canister at Rp 5,750 and Rp 7,255 per kg, respectively. 

The two LPG canisters sizes are not subsidized and Pertamina is not fully independent in setting these last prices but follows the  fluctuations in international market prices.