Pertamina set to supply Malacca Strait ships

BATAM. State-owned oil and gas firm PT Pertamina expects to boost the supply of diesel and marine fuel oil (MFO) for ships passing through Asia’s busiest sea lane, the Malacca Strait, following an expansion plan.

Pertamina’s corporate communications vice president, Ali Mundakir, said on Thursday evening that the expansion of its large fuel terminal on Sambu Island, Riau Islands, would not only boost Pertamina’s fuel storage capacity but also enhance the firm’s competitiveness.

“It’s a competitive business, [the supply of diesel and MFO], and so far our supplies have been limited,” he told The Jakarta Post.

Pertamina senior vice president of shipping Suhartoko said total demand for diesel and MFO in the Malacca Strait stood at 42 million kiloliters (kl) per year, while Pertamina was only able to supply 250,000 kl from its own production.

“Singaporean suppliers still control the largest portion of the market,” he said, adding that Pertamina imported around 3 million barrels of diesel per month from foreign suppliers.

Suhartoko said he expected Pertamina to possess a larger share of the market once the Sambu terminal expansion was complete.

The US$94 million expansion project would be carried out in three stages through 2018, he said.

“We will increase our fuel storage capacity by 150,000 kl in the first stage, and by 600,000 kl in the final stage,” he said.

Suhartoko said that this year alone, the terminal would be able to store between 400,000 kl and 600,000 kl of fuel, including diesel and gasoline.

The terminal expansion will also add to the terminal’s docking capacity, increasing it from the current 40,000 deadweight tons (DWT) to 100,000 DWT.

“With these facilities, we will be able to import more diesel and MFO, not only from Singapore but also from other countries, such as South Korea and Taiwan,” Suhartoko said.

He added that Pertamina would then resell the imported diesel and MFO to both domestic and international ships passing through the Malacca Strait.

“We see tremendous market potential that we can capitalize on, as Sambu is in a very strategic location,” he said.

Suhartoko added that Pertamina also hoped to start exporting diesel and MFO in the future.

He said, however, that the government needed to first reduce the value-added tax (VAT) rate on exported MFO and diesel. “The government imposes 10 percent VAT on exported diesel and MFO, but zero VAT on imported fuel,” he said.

Meanwhile, Ali said Pertamina also aimed to boost its fuel production capacity.

“We have allocated Rp 60 trillion [$5.1 billion] for this year’s capital expenditure, most of which will be spent on upstream projects,” he said.

In addition to the Sambu project, Pertamina has also commenced the expansion of another oil terminal in Tanjung Uban, Riau Islands, that will absorb investment worth $62 million.

“The expansion of the two terminals is part of our long-term target to have a total national storage capacity of 7.5 million kl in the next five years,” Pertamina’s business and marketing director, Hanung Budya Yuktyanta, earlier said on Wednesday on Sumbu Island.

He said Pertamina currently had a storage capacity of 4.5 million kl, which was only sufficient to meet national fuel consumption for 20 days. (koi)