The year 2010 is the final year for Pertamina to complete the program it started two years ago.

“We expect to complete the program in the first half of 2010,” Pertamina’s deputy director for marketing and trading Hanung Budya told reporters on Tuesday.

The government launched the koresene-to-LPG conversion program in 2007 to help reduce kerosene consumption, which had  increased the cost of the fuel subsidy.

Under the program, the government is switching the subsidy from kerosene to the three-kilogram canister LPG, targeting poorer people.

The conversion program is implemented by Pertamina by distributing conversion packages, comprising a stove and a 3-kilogram LPG canister, to targeted households.

Hanung said that, as of Dec. 21, Pertamina had distributed 42,490,544 conversion packages.

In the same period, Pertamina had distributed as much as 2,369,762 metric tons of subsidized LPG thereby substituting for 7,452,056 kiloliters of kerosene.

“Banten, Jakarta , West Java , Yogyakarta and South Sumatra have been converted to LPG and no longer need any kerosene,” Hanung said, claiming the program had so far saved a total of about Rp 12.33 trillion in expenditure on the fuel subsidy.

As for 2010, Pertamina expects to distribute as many as 9,395,285 conversion packets and 2,973,342 metric tons of subsidized LPG as well as  expecting to substitute for 6,172,984 kiloliters of kerosene.

Hanung said the kerosene-to-LPG conversion program would save about Rp 10.4 trillion in fuel subsidies in 2010 alone.

The conversion program has increased the domestic demand for LPG while at the same time, it has reduced the demand for kerosene.

Pertamina estimates that the total domestic demand for LPG, both for subsidized LPG and non-subsidized LPG, will reach about 4.334 million metric tons next year.

Hanung said that as much as 1.929 million metric tons of this demand would be fulfilled from

Pertamina’s own production and from LPG domestic private producers.

Another 1.5 million metric tons will be fulfilled by imports via the Petredec trading company, he added.

“Thus, the available LPG supply for next year is at about 3.429 million metric tons [so far], meaning that we still need about 909,000 metric tons of LPG,”

“We will continue evaluating this deficit. There are two options. If the deficit is big and continues, we will open an international tender. But, if the deficit is small, we will open a spot tender,” Hanung said.

But, he added that Pertamina preferred to get its additional LPG supply from domestic LPG producers.

The conversion program has also caused an oversupply of kerosene. “We have the potential to export about 3 million barrels of kerosene,” he said.

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