Indonesia's state-owned Pertamina is assessing the potential for importing oil products from the US, in line with the energy ministry's directive to increase fuel purchases from the country as Jakarta continues to negotiate tariff terms with Washington.
Indonesia's energy minister Bahlil Lahadalia has urged state-owned Pertamina to proceed with fuel imports from the US despite existing logistical challenges, according to the country's state news agency on 23 May.
The minister's remarks comes as Indonesia seeks to persuade the Trump administration to lower the "reciprocal" tariffs on Indonesia, which are set to take effect by the end of July after the tariffs were previously delayed for 90 days.
There is no reason Indonesia cannot import fuel from the US, he said, noting that the country already imports liquefied petroleum gas (LPG) from the country.
No specific details were provided on whether the fuel supplies in question referred to refined products —such as gasoline or diesel — or crude oil. But the minister referenced reducing Indonesia's reliance on fuel imports from Singapore, which primarily consist of gasoline and diesel.
The statement was also made a day after Pertamina president director Simon Aloysius Mantiri said that Pertamina is reviewing the possibility of shifting part of its oil and gas imports from other countries to the US. But the primary concern lies in the longer distance and delivery times associated with US shipments, including any risks of disruptions that could hinder the country's energy security, Mantiri said. The comments come after Pertamina recently issued five new gasoline tenders, two of which exclude Singapore as a port of origin option. The tenders closed on 20 May but are still under review and negotiations until 30 May. All five tender documents also state that the cargo origin should be clearly specified regardless.
Import challenges
It is "extremely unfeasible" for Indonesia to import gasoline from the US, gasoline traders in Singapore told Argus, citing expensive freight costs and logistical challenges. The US likely lacks sufficient supply to meet Indonesia's import needs, they added. The US itself is a key gasoline demand hub and has to import finished grade gasoline and blendstocks from other regions including Asia and Europe. Finished gasoline rarely, if ever, finds its way to the Asia-Pacific from the US.
Singapore, along with Malaysia, is also one of the biggest gasoline suppliers to Indonesia because of the region's role as a gasoline blending hub. Gasoline components from Asia-Pacific and the Middle East are shipped to storage facilities in the two countries, where they are subsequently blended to meet Indonesia's fuel specifications before being re-exported. Geographic proximity also makes sourcing from Singapore and Malaysia more cost-effective for Indonesia because of significant freight savings. Shipments from the countries are typically delivered to Indonesia within a few days, compared to a possible 40-60 day voyage from the US.
This shift in trade policy could be more realistically applied toward increasing the share of US crude imports, particularly allowing Pertamina expand its intake of US WTI crude. Pertamina's crude slate currently primarily consists of light and medium sweet grades, mostly West African grades, along with some occasional WTI cargoes.
