Pertamina ... cutting back production

Indonesia could increase its fuel imports this year as state energy firm Pertamina plans to cut output at one of its six refineries to reduce costs, The Jakarta Post and other local media said.

But any climb in imports would likely be slight as the Southeast Asian nation’s consumption of Premium (RON 88) gasoline and subsidised diesel fuel has been declining since last year, the Post quoted Pertamina CEO Dwi Soetjipto as saying.

Any increase in Indonesia’s fuel imports would benefit regional export-oriented refiners such as those in Southeast Asia’s trading and refining hub, Singapore. Former Opec member Indonesia is one of the world’s top fuel importers.

Pertamina did not respond to requests for comment from Reuters.

Among moves to boost efficiency, Pertamina expects to operate its Plaju refinery in South Sumatra at half its production capacity of 133,000 barrels per day, the Post reported.

As crude output has declined, Plaju has been relying on costly imports to maintain production levels, Soetjipto said, noting that in future the plant would only use crude from surrounding oilfields.

Indonesian consumption of the Premium grade of gasoline is currently around 77,000 kilolitres per day, down from an average of 83,000 per day in 2014, said Pertamina’s vice president for fuel retail, Muhammad Iskandar, according to the Post.

The change was partly a result of drivers switching to higher grade gasoline that was now comparatively cheaper and closer in price to Premium, Iskandar said.

Subsidised gasoil (diesel) fuel consumption has declined to around 37,000 kl per day from 43,000 on average in 2014, partly due to the slowing economy, Iskandar said, referring to the mining sector.

"We have had no imports of diesel fuel in the last two months," he said.

Indonesia is in the process of upgrading its existing refineries and building new facilities, hoping to roughly double the country’s output by 2025. Because of the high operating cost of its aging facilities, imported fuel is often cheaper than domestically produced fuel.