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Indonesia's Pertamina eyes US LPG to replace some Mid East supply

Staff Writer |
Indonesia's state-owned oil and gas company Pertamina is eyeing more LPG imports from the U.S. to replace part of its Middle Eastern supply as U.S. cargoes are currently cheaper.

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"Currently more than 90% of LPG supply comes from the Middle East and the rest from the spot market. We would like to import more from the US into Indonesia.

"We expect to get a more competitive price from US," said the senior vice president of Pertamina's integrated supply chain, Daniel Purba, on the sidelines of the LPG Indonesia 2017 conference in Jakarta.

The expansion of the Panama Canal enables US LPG cargoes to reach the Asia Pacific, including Indonesia, faster than the Cape of Good Hope passage.

With that, Pertamina expects its LPG imports from the Persian Gulf to decline, although it estimates overall US LPG imports will remain lower than Middle Eastern supplies, according to Purba. U.S. cargoes currently make up 3% of Pertamina's overall imports.

The biggest domestic LPG supply currently comes from Bontang in East Kalimantan.

Pertamina also expects Indonesia to get LPG supply from undeveloped LNG projects, according to Bambang.

Inpex Masela is the biggest LNG project that is expected to come on stream around 2021. BP's third train at Tangguh is due to come on stream in 2019.

"Pertamina and the government are studying other energy resources so it can cut back on LPG imports in the future. We are studying brown coal," Bambang said.

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