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Indonesia's Pertamina seeks new processing agreement for firm's Iraqi crude

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Indonesia's Pertamina is seeking a new crude processing agreement for its 2017 Iraqi crude allocations as the firm's current processing agreement with Shell expires in December.

[SINGAPORE] Indonesia's Pertamina is seeking a new crude processing agreement for its 2017 Iraqi crude allocations as the firm's current processing agreement with Shell expires in December.

The state-controlled oil firm issued a tender for the new processing deal earlier this month and has since closed it. It is expected to announce the results "soon", a Pertamina official said, without disclosing the exact timeline.

Refiners and selected traders were invited to submit proposals for a processing agreement that will see Pertamina supply one to two million barrels of Iraqi crude per month in exchange for similar volumes of oil products, trading sources with knowledge of the tender said.

The processing agreement will last for 12 months starting January 2017, and both Iraqi Basra Light and Heavy crude grades could be supplied by the Indonesian oil firm.

Shell is one of the participants in the tender, said a second Pertamina official, speaking on condition of anonymity because the official was not authorised to speak to the media.

Shell didn't immediately respond to a request for comment.

In June, Pertamina selected Shell to process one million barrels per month of Iraqi crude at a Singapore refinery from July to December this year.

Pertamina's monthly Iraqi oil shipments to the Singapore refinery are likely to consist of 290,000 barrels from a stake in the West Qurna block and a further 700,000 barrels from other Iraqi fields.

The firm has resorted to crude processing agreements with third parties as its domestic refining capacity of around one million barrels per day only meets about two-thirds of Indonesia's daily oil consumption.

Indonesian refineries are also geared to refine low sulphur crude grades from West Africa and the Asia-Pacific and less suited to process high sulphur crude from the Middle East like Iraqi Basra Light and Heavy.

REUTERS