Indonesia eyes overseas oil storage to hold buffer stocks
Indonesia is in talks with several Middle East nations to lease oil storage tanks as Southeast Asia’s biggest consumer aims to eventually create buffer crude and oil product stocks equivalent to 30 days of consumption but faces domestic infrastructure challenges.
The country, which consumes around 1.5 million-1.6 million b/d of refined products, last year unveiled long-term plans to build 30 days of stocks over the next five years. Indonesia currently has no mandate on stock levels oil companies need to hold.
State-owned Pertamina is expected to hold stocks equal to between 18 and 22 days of demand, and its stocks currently hover at around 18 days.
The government would have preferred holding stocks domestically but since domestic storage availability is insufficient, the country is looking overseas, director general of oil and gas at the energy and mines ministry Wiratma Puja said last week.
Setyorini Tri Hutami, downstream director at the energy and mines ministry said Friday that the government was still studying whether the buffer stocks would be held directly by the government, state-owned Pertamina, or a new company should be set up to specifically manage the storage.
Puja said Indonesia was talking to Oman, Kuwait, Iran and Saudi Arabia about the possibility of using storage tanks there.
“The government does not think distance will be a problem. Indonesia wants to buy as much crude and oil products as possible when prices are lower. Crude oil and fuels will be brought to Indonesia as and when they are needed,” Hutami said.
Officials said the government would initially aim to create buffer stocks equivalent to 15 days of consumption.
“The government plans to start the project this year gradually. In the medium term, at least Indonesia will have 15 days of buffer stocks,” Hutami said.