Ika Krismantari, The Jakarta Post
State oil and gas firm PT Pertamina will import 500,000 tons of liquefied petroleum gas (LPG) next year to support the government's program to gradually replace highly subsidized kerosene, an official said Tuesday.
Pertamina deputy head of marketing Hanung Budya said that the country would need the additional supplies of LPG in 2008 in order to meet the government's target of replacing one million kiloliters (kl) of kerosene.
The government's kerosene-to-LPG conversion program is expected to raise Indonesia's LPG demand to 1.9 million tons in 2008 from this year's 1.4 million.
However, Hanung was quick to add that the imports could be even bigger if the government decided to accelerate the conversion program.
""The government wants us to replace 75 to 80 percent of the total of 10 million kl of kerosene that people consume annually with LPG by 2010.
""But, it's possible that we might decide to speed things up so as to achieve 60 percent of that target next year. That means we would need a lot more than the 500,000 tons of LPG,"" Hanung said, adding that at the originally envisaged pace of conversion, the company would only have achieved 19 percent next year.
Hanung said that Pertama was currently in talks with a number of major players, such as American oil giant ConocoPhillips and British-based oil company BP with a view to securing the additional gas supplies.
For this year, Indonesia is expected to import 100,000 tons of LPG out of a total domestic demand of 1.4 million tons as Pertamina will only be able to supply 850,000 tons, while other local LPG producers, including Medco and Trans Pacific Petrochemical Indotama, will supply 450,000 tons.
As a result of the conversion program, the government hopes to save about Rp 1.28 trillion (US$142 million) in fuel subsidy spending should the program achieve its target of replacing 319,000 kl of kerosene with 181,000 million tons of LPG.
The government has allocated Rp 61.93 trillion for fuel subsidies this year.
Elsewhere, Hanung said that Pertamina would import 10.4 million barrels of fuel products in August, made up of 3.4 million barrels of gasoline, 6 million barrels of diesel oil and 600,000 barrels of kerosene.
