GO
Loading...

Pertamina concludes LSWR term contract talks at lower premiums

Tuesday, 9 Oct 2012 | 5:56 AM ET

SINGAPORE, Oct 9 (Reuters) - Indonesia's state-owned Pertamina has concluded term negotiations to supply low sulphur waxy residue (LSWR) in the fourth quarter at lower premiums, traders said.

The term contract, to supply about 200,000 barrels of V1250 grade LSWR a month, was awarded at a premium of $50.00-$55.00 a tonne to Singapore quotes, according to the traders.

This is significantly lower than last quarter's premium of $130.00 a tonne above Singapore quotes. The buyers were Mitsui, Itochu and Shell, the traders said.

The fall was mainly due to weak demand from Japan, where energy conservation efforts and lower-than-expected summer temperatures curbed the country's fuel oil consumption.

"Summer (demand for low sulphur fuel oil) didn't go as well and I don't think we can expect much this winter, so no way premiums are recovering to where they were in the beginning of the year," a trader said.

Pertamina is one of the region's biggest LSWR suppliers and typically exports up to 1 million barrels a month from its Balikpapan refinery, most of it via term tenders.

(Reporting By Lee Yen Nee and Jessica Jaganathan; Editing By Miral Fahmy)

((lee.yennee@thomsonreuters.com)(+65 68703823)(Reuters Messaging: lee.yennee.thomsonreuters.com@reuters.net))

Keywords: LSWR INDONESIA/PERTAMINA