SINGAPORE (Reuters) - Potential exports of gasoil from Indonesia’s state-owned refiner Pertamina [PERTM.UL] are likely to be of a high sulfur grade, two sources familiar with the matter said.
This could help ease supply tightness of the fuel at a time when traders are shipping cargoes to the United States and Latin America after Hurricane Harvey disrupted U.S. Gulf refinery production and as demand is expected to pick up in Asia after the monsoon season, traders said.
Pertamina will likely propose to ship gasoil with a sulfur content between 1,400 parts-per-million (ppm) and 2,500 ppm, the grades produced by its refineries, one of the sources said.
The cargoes will be shipped in lots of 200,000 barrels each, though overall volumes will depend on market fundamentals and on how much is available, the source said, declining to be named as he was not authorized to speak with media.
“It will depend on the price and on the stock levels,” he said.
Pertamina received a license from the government about two to three weeks ago to export gasoil for the first time, sources said on Monday.
While the company is lobbying the Indonesian government to be the sole importer of the fuel into the country - which would mean other fuel retailers would have to buy imported or locally produced gasoil from Pertamina - it may still have to export if its storage spaces become full, the two sources said.
Pertamina declined to comment on the details of any potential gasoil exports.
Pertamina used to be a key importer of gasoil, shipping in about 2 million to 3 million barrels a month, but it has eased off the past few years as it ramped up its refining output and domestic demand waned due to a slowdown in Indonesia’s mining sector and last year’s higher biodiesel mandate.
Pertamina likely imported more gasoil than it needed from October last year to April this year as it prepared for maintenance, which could have driven its inventory levels higher, a Singapore-based trader said. <REF/A>
Indonesia - including both Pertamina and private importers - took in 143,000 barrels per day (bpd) of the fuel in the first half of this year, compared with 105,000 bpd in 2016 and 141,000 bpd in 2015, said Nevyn Nah, analyst at Energy Aspects.
Pertamina’s potential exports of high sulfur gasoil could meet requirements from the shipping market, traders said.
Under International Maritime Organization (IMO) requirements, the cap on sulfur emissions from vessels will fall to 5,000 ppm by 2020 from the current 35,000 ppm.
Reporting by Jessica Jaganathan; Editing by Tom Hogue