Pertamina buys term gasoline from Petronas
Indonesian state-owned oil and gas company Pertamina signed an annual contract for purchasing 600,000 bbl per month of gasoline from Malaysian state-owned company Petronas in February. The purchase value is estimated to be $500 mil. Indonesia relies on imports for nearly half of its petroleum products demand. In view of rising geopolitical risk in Middle East due to the conflict between the US and Iran, Indonesia believes that expanding the supply sources of petroleum products is important for the long term stabilization of domestic supply and demand. The agreement between Pertamina and Petronas came with the renewal of a crude oil swap contract between the two companies. Through the swap contract, Pertamina takes crude oil in Indonesia where Petronas has concession while Petronas takes crude oil in Malaysia where Pertamina has concession. This results in a reduction in transportation costs. Pertamina has concession in Kikeh, Kimanis and Kidurong crude in Malaysia while Petronas has concession in Jabung and Ketapang crude in Indonesia.