Pertamina redirects gas and oil to domestic market

Indonesia's state-owned oil and gas company Pertamina will offer gas and oil to local branches of Anglo-Dutch major Shell, Malaysia's Petronas and Indonesian company Aneka Kimia Raya, after dropping its plan to export gas and oil in the first quarter of 2009, a senior official said.
"We will allocate gas and oil that was originally planned to be exported to the domestic market. We will offer to Shell, Petronas, AKR, as well as Perusahaan Listrik Negara [state-owned power utility company]," said Pertamina's trading and marketing deputy director, Hanung Budya. The source said Pertamina is considering offering the gas and oil at a discounted price.

Shell and Petronas have built fuel stations in the capital, Jakarta, and surrounding area. AKR sells gas and oil to industrial customers. Pertamina has delayed its plan to export gas and oil in the first quarter of 2009, citing difficulties in getting buyers with fair-value bids. Pertamina's gas and oil stocks equate to a 40-day supply, with one day requiring around 60,000 kiloliters.
Pertamina had aimed to start gas and oil exports -- a first for the company -- due to slack domestic demand, which is estimated to have dropped by 30 %. In addition, its refineries have been producing more gas and oil due to the country's kerosene-LPG conversion program, resulting in Pertamina producing more gas and oil instead of kerosene, the company's former president, Ari Soemarno, has said.

Indonesia is in the middle of a government-driven effort to switch end users from kerosene, which is heavily subsidized, to LPG.
The program is expected to be completed by 2009.