The cargoes have either been cancelled or deferred to later dates
Pertamina defers three diesel cargoes from Kuwait
SINGAPORE, April 1, 2015
Indonesia's Pertamina has failed to lift about 270,000 tonnes of diesel from long-term supplier Kuwait Petroleum Corp this year, as demand for the fuel has dipped in Indonesia and on supply disruption in Kuwait, industry sources said.
The cargoes have either been cancelled or deferred to later dates, the sources said.
Pertamina has a term contract with KPC to receive 90,000 tonnes a month of diesel. But three cargoes for delivery over February to April have been either cancelled or deferred, two of the sources said.
KPC's diesel production has been reduced this year due to intermittent problems with a secondary unit at its refinery, the first source added. Its term supply to other countries, however, have not been affected.
"Diesel demand has been lower in Indonesia this year due to removal of subsidies and less smuggling taking place as a result, so it was a mutual agreement to defer the cargoes," the source said.
Indonesia's diesel imports had been cut by a third last year due to reduced demand from the mining sector, increased biodiesel use in transport and industry and a retail price hike.
They are expected to reduce further this year as Indonesia plans to increase the minimum bio content in diesel fuel for transport to 15 per cent from 10 per cent from April.
Demand from the mining sector continues to be weak due to slow demand for metals from top buyer China, an industry source said.
Pertamina could also be increasingly turning to the spot market after a recent overhaul of the country's oil procurement system, traders said.
Pertamina took over oil product purchases from its trading arm Petral earlier this year, part of an industry shake-up in President Joko Widodo's anti-corruption campaign to restore investor confidence.
It has also opened up its tender process to include refiners and trading firms, reversing a government decision a few years ago to limit suppliers to national oil companies (NOCs).
Pertamina and KPC officials could not immediately be reached for comment.--Reuters
