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Pertamina turns to Russia for oil amid energy price hike
Russian crude is being sold below global prices due to ongoing sanctions.
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State-owned oil and gas company Pertamina is considering buying Russian crude oil, which is currently cheaper than global prices, as Indonesia seeks to shield its state budget from soaring international energy prices. (Shutterstock/File)
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tate-owned oil and gas company Pertamina is considering buying Russian crude oil, which is currently cheaper than global prices, as Indonesia seeks to shield its state budget from soaring international energy prices.
Pertamina president director Nicke Widyawati said on Monday that Pertamina was in consultation with the Foreign Ministry and Bank Indonesia (BI) regarding the plan, and had approached several Russian sellers to buy crude for testing at Pertamina's refineries.
"Amid this geopolitical situation, we see an opportunity to buy oil from Russia at a good price” she told members of House of Representatives Commission VI overseeing trade, industry and investment, referring to Russia’s invasion of Ukraine.
She added that Pertamina would only deal with Russian companies that were not facing sanctions, and it had discussed payment arrangements, which may go through India.
Russian benchmark oil grade Urals on March 1 was bid at a discount of more than US$18 below international crude benchmark Brent, a record for the post-Soviet era, following a raft of sanctions imposed on Moscow over the war in Ukraine, as reported by Reuters. The sanctions include those related to trade and financial transactions.
Pertamina's plan comes as surging global oil prices place fresh strains on the state budget as the government seeks to balance higher energy subsidy spending with fiscal-consolidation plans.
On one hand, the government is seeking to maintain domestic energy prices even as international oil benchmark Brent exceeded US$120 a barrel on March 6, double the $63-per-barrel assumption in the 2022 state budget. The assumption provided a baseline to set the energy subsidy budget at Rp 134 trillion ($9.34 billion) for this year.
