State oil and gas company PT Pertamina says it is considering buying high-sulfur sour crude oil in a bid to increase the company’s profit margin, a move previously unforeseeable as the company’s refineries can only process sweet crude oil.
A statement for internal circulation signed by Pertamina’s board of commissioners says the company must consider ways to lower production costs by relying on sour crude oil but without
negatively affeting the quality of fuel output.
“[Pertamina is also investigating] opportunities for crude processing deals by using the sour crude in a bid to increase the margin,” the statement says.
Pertamina currently operates six refineries with a total processing capacity of 1,036,000 barrels oil per day (bopd). About 65 percent of that capacity is occupied by domestic production, while the remaining 35 percent is imports.
The refineries are Dumai refinery in Riau; Plaju in South Sumatera; Balongan refinery in West Java; Cilacap refinery in Central Java, Balikpapan refinery in East Kalimantan and Kasim refinery in Papua.
Pertamina’s corporate secretary Toharso said the company’s board of directors would evaluate the recommendation to see whether it is applicable to the company’s refineries or not. “If it is applicable and profitable, Pertamina will follow [the recommendation],” he said.
Heru Sutrisno, senior vice president for business development at Pertamina’s processing directorate, said the company’s six refineries were still unable to process the pure sour crude.
“This must be done in phases by blending the sour crude with the sweet crude,” Heru said.
Pertamina is preparing to build several new refineries. “Our new refineries will hopefully be
able to process sour crude,” Toharso said.
Although the commissioner asked Pertamina to investigate the purchase of sour crude, he also asked Pertamina to maximize profits on crude purchases from domestic sources.
As for imports, the commissioner recommended Pertamina narrow the variety of its imported crude so that the company’s refineries do not need to constantly switch their feed stock.
The commissioner also recommended Pertamina buy more crude directly from national oil companies or official traders. Toharso said this would help secure supply.
He said that about 70 percent of crude imports were based on long term contracts, while the remaining 30 percent were bought from spot markets.
