Indonesia’s short-term gasoline import contracts could decline in the second half of this year because of new offshore crude refining arrangements that Pertamina is exploring, a company official said.

High operating costs at Indonesia’s ageing refining facilities mean that imported fuel is often cheaper than domestically produced fuel and Pertamina must also import to meet domestic demand.

With Indonesia’s planned upgrades to existing refineries and development of new ones not expected to be completed until 2019 at the earliest, Pertamina hopes to process up to 1 million barrels per month of Iraqi crude offshore.

If Pertamina signs a deal with an offshore refinery, its short-term gasoline import contracts could shrink to about 6 million barrels a month from July to December, from 7 million barrels per month in the first half of the year, said a company official who asked to remain anonymous. Pertamina is in negotiations with refineries in South Korea, Japan, China, India and Singapore to process crude from fields it holds stakes in outside Indonesia.

The company expects to open a tender in the middle of May for up to 7 million barrels per month of crude for July to December delivery, the official added.

Daniel Purba, who heads Pertamina’s Integrated Supply Chain operation, said the company hopes to complete development of its Tanjung Uban fuel blending facility near Singapore this year. The facility is expected to reduce Pertamina’s imports of RON 88 premium gasoline by a further 1 million barrels a month starting in 2017.