Pertamina to buy all Indonesia crude output: Government

The Indonesian government is planning to require all crude produced in the country to be sold directly to state-owned Pertamina as part of plans to cut imports and reduce currency outflows.

The requirement will be formalised in a new regulation as soon as possible, the energy ministry said today.

Foreign contractors active in Indonesia that will potentially be affected by the change include Chevron, ExxonMobil and Italy's Eni. Chevron produced 122,000 b/d from its Rokan operations in Sumatra last year. And ExxonMobil exports some cargoes from the Cepu block that it jointly manages with Pertamina, where the companies are aiming to increase output by 50pc to 300,000 b/d.

Limited amounts of Indonesian crude and condensate have been exported this year. Eni, which operates the Jangkrik field, recently sold 200,000 bl of Indonesian Senipah condensate for September loading, although this was a rare spot sale as the bulk of Senipah has gone to the Indonesian market since early this year.

Japanese trading firm Petrodiamond loaded around 500,000 bl of crude from Indonesia's Dumai port in August to take to Singapore. Dumai is the loading port for Minas and Duri crude, which are produced from Chevron's Rokan operations.

ExxonMobil sold 650,000 bl of its equity Banyu-Urip crude from Cepu for July loading, and a similar sized cargo for August loading. The cargoes were likely sold to buyers in Thailand.

The new requirement is the latest step by Jakarta to expand Pertamina's role in Indonesia's upstream sector at the expense of foreign firms. The government earlier this month said it would award the Rokan block to Pertamina when Chevron's production-sharing contract expires in 2021. Pertamina this year took over the country's biggest gas field, Mahakam, from Total and Japan's Inpex.

The crude sales requirement is one of several measures to save on foreign exchange costs announced after a meeting between energy minister Ignasius Jonan and Indonesian president Joko Widodo today.

A 20pc biodiesel blend will be introduced on 1 September, potentially saving $2bn in oil costs this year and $4bn next year. The energy ministry also announced plans to increase coal production and more closely monitor sales of premium gasoline.

Indonesia's currency the rupiah has weakened sharply in recent weeks against the US dollar to a near three-year low.