Indonesia’s Pertamina switches import strategies amid cheap gasoline cargoes
Indonesia’s state-owned Pertamina has adjusted its gasoline purchase strategies for April cargoes, taking advantage of cheap barrels in the region as prices buckle under the weight of weak fundamentals, industry sources told S&P Global Platts this week.
Late Friday, the region’s largest buyer of gasoline issued a tender, closing March 24, seeking a total 1.2 million barrels of 92 RON gasoline in four separate parcels of various sizes for April, according to tender documents seen by Platts.
However, the company has decided to bid for cargoes on a fixed price basis, deviating from its traditional practice of bidding on a floating price basis.
Pertamina typically buys gasoline cargoes, with octane equal or below 92 RON, at a differential to either the whole month average of the Mean of Platts Singapore 92 RON gasoline assessments or Mean of Argus Singapore 92 RON gasoline assessments.
“They are likely trying to secure cheap cargoes given the current market situation. If they do a floating price, they will be exposed to any sharp recovery later in April,” one Singapore-trader said.
The change comes amid plunging motor fuel prices, which has been hard hit by the accelerating spread of the coronavirus and falling crude values.
On March 19, Platts had assessed FOB Singapore 92 RON gasoline — the most liquid Asian gasoline benchmark — at an 18-year low of $23.07/b, last lower on February 22, 2002 at $22.90/b.
The price has since recovered to $28.26/b at the 0830 GMT Asian close on Friday, Platts data showed.
“Near term demand looks bearish. Even if the coronavirus subsides, people will be still be cautious in their daily activities,” a second source added.
In addition to switching the pricing basis, Pertamina has added Brunei as a potential port of loading for its spot cargoes, further demonstrating the oil giant’s efforts to diversify its sources of gasoline imports.
The company was last observed to have included Brunei as a port option in its term tender for the first half of 2020.
The move also comes as the 160,000 b/d Brunei-based Hengyi refinery has been ramping up commercial operations since the start of the year, industry sources said
Nevertheless, market participants are keeping a close watch on Pertamina’s demand for April, with the state-owned company expected to import between 10 million to 11 million barrels of gasoline, Platts reported previously.