Jakarta. Indonesia will meet with Middle East oil producers on the sidelines of an OPEC meeting in Vienna this week to negotiate possible long-term crude supply agreements for its refineries, a senior government official said.

The Southeast Asian country, which is considering asking to rejoin the Organization of the Petroleum Exporting Countries after leaving in 2008, plans to hold bilateral meetings with Saudi Arabia, Kuwait, Iran, Iraq, Oman and the United Arab Emirates.

“We will discuss purchasing crude from them. We have a plan to build refineries, so we need crude supplies,” Wiratmaja Puja, director general of oil and gas at Indonesia’s Energy Ministry, told Reuters late on Monday.

Indonesia, which is expected to become the world’s largest gasoline importer by 2018, has struggled to attract investment in its refining sector and its newest facility is more than 20 years old.

Government talks with Kuwait Petroleum and Saudi Aramco stalled in 2013 over tax issues, and similar negotiations with Iran and Iraq for crude supplies have also made little headway.

But President Joko Widodo, who came into office in October, has renewed the push to attract investment in the oil sector by cleaning up the graft-ridden industry and offering investors better incentives.

“Even though we don’t have a formal commitment with them, they have shown interest to supply crude to us for the long-term, 20-30 years, and they are also ready to have a share in our refinery projects if necessary,” Puja said.

The government wants to build four new refineries and upgrade four existing facilities within 10 years, he said.

Indonesia, which is attending the OPEC meeting on Friday as an observer, will decide after the end of the gathering whether to officially request to rejoin as a member.

Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group in 2008 as oil prices hit a record high, and rising domestic demand and falling production turned it into the net oil importer it remains currently.

Full OPEC members must be net oil exporters, but so-called associate members are admitted under some circumstances.

If it returned, Indonesia would be the fourth-smallest OPEC producer ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries.

Reuters

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Jakarta. Indonesia, the world’s top producer of refined tin, has issued regulations intended to stop illegal mines from exporting the base metal, the trade minister said on Tuesday.

Under the move due to take effect on Aug. 1, only tin ingots, tin solder and tin plate will be allowed to be shipped, and exporters will need to present proof that the metal comes from government-certified mines, Trade Minister Rachmat Gobel told reporters.

Reuters

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Jakarta. Indonesia’s state-run oil company PT Pertamina will operate the Mahakam natural gas block offshore East Kalimantan starting from Jan. 1, 2018, the country’s energy minister told reporters on Friday.

Minister Sudirman Said said Pertamina had met on Friday with Total and Inpex, the current operators of the block, to discuss the transition process.

Analysts have questioned Pertamina’s technical and financial capacity to operate Indonesia’s single-largest source of natural gas and maintain its production level — around 1.76 billion cubic feet per day (bcfd) last year and expected at around 1.7 bcfd this year. The Mahakam block is the main source of gas for Indonesia’s Bontang liquefied natural gas (LNG) plant in East Kalimantan.

“There will be further discussion within two weeks to decide how Pertamina would be involved in the transition process, and how the operation would be after 2017, and whether Total would still have a participating interest,” the energy minister said, adding that Pertamina would own a majority stake.

Pertamina and its future partners should sign a new production sharing contract with the government before the current contract expires in 2017, Said said.

Pertamina had earlier said it would invest around $2 billion annually into the gas block if given control of Mahakam, and target output of 1.2 bcfd to 1.5 bcfd.

“One thing that we have conveyed is that we don’t want production to be disrupted,” Pertamina’s chief executive Dwi Soetjipto said on Friday, adding that Pertamina is prepared to finance the operation.

Officials from Total and Inpex declined to comment.

Indonesia is one of the world’s top five LNG shippers, although its exports have been declining in recent years. With domestic output slipping and local demand growing, the country has begun consuming more of its own production and seeking overseas supplies.

Reuters

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Jakarta. Indonesia will impose a levy of $50 a tonne on exports of crude palm oil when prices fall below a threshold triggering a monthly tax on shipments overseas, the chief economics minister said.

When prices of crude palm oil fall below the threshold of $750 a tonne on average, the world’s top producer of the tropical oil cuts the monthly tax on its CPO exports to zero.

Benchmark Malaysian palm oil futures have fallen more than a fifth over the last year, and ended on Friday at 2,160 ringgit ($579) per tonne.

Southeast Asia’s biggest economy set its crude palm oil export tax for March at zero, unchanged since October last year.

Indonesian officials are preparing new rules for a charge of $50 on every tonne of CPO shipped at the zero export tax rate, Sofyan Djalil told reporters, with the funds going to help pay for biodiesel subsidies announced in recent weeks.

“At any (CPO) price we will take $50 a tonne,” Sofyan Djalil said late on Friday, making clear that when the CPO export tax kicked in, the government would allocate $50 a tonne to its biodiesel fund from the revenue earned.

The measure will go to Indonesian President Joko Widodo for approval on his March 30 return from overseas trips.

Indonesia ramped up biodiesel subsidies last month, in a bid to protect its biofuels industry against lower prices of crude and cut costly imports of diesel.

But a subsequent decision to boost the minimum bio content in diesel fuel to 15 percent from 10 percent increased the amount of funds needed to pay the subsidies for the higher volumes of biodiesel.

To secure processing supplies, Djalil said the government may also require CPO producers to allocate 15 percent of total output for domestic use, but gave no further details.

A major industry group this week said the government was looking to lower the threshold for the monthly export tax, to between $500 and $600 a tonne.

The CPO export tax, aimed to help processing industries and secure domestic supplies, rises to a maximum of 22.5 percent, depending on how far above $750 average prices climb.

Before the recent changes, Indonesia’s CPO production was seen rising 7 percent to 31.5 million tonnes, with exports falling 500,000 tonnes to 19.5 million, industry estimates show.

Reuters

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Jakarta.  Newmont Mining’s Indonesian copper export permit will not be renewed beyond March 19 unless it strikes a deal with Freeport-McMoRan to invest in the latter’s planned smelter, an energy ministry official said on Monday.

The government is in talks with miners about their plans to develop domestic smelting and processing facilities.

“For an export permit extension for Newmont, we are still awaiting an agreement between Freeport and Newmont,” coal and minerals director general Sukhyar told a news conference.

“It will depend how serious Newmont’s commitment to cooperate with Freeport is and how much they will share the investment,” Sukhyar said.

Early last year, Indonesia put in place export restrictions aimed at forcing mining firms to develop smelting and processing facilities so that Indonesia could refine all of its raw ores and concentrates.

Although fellow US-based miner Freeport is pushing ahead with expansion plans at Indonesia’s sole copper smelter at Gresik, Newmont has said multiple studies show its Batu Hijau mine cannot sustain a smelter on its own.

The government has long urged the companies to cooperate on a smelter.

After an increasingly fractious nine-month export tax dispute, Newmont signed a deal with the state late last year that allowed for the resumption of copper concentrate exports. This agreement is set to end unless it can show it is serious about domestic processing.

“If they really commit, they will be given an export permit extension,” Sukhyar said. “The time limit for us to give an export permit extension is March 19.”

Newmont and Freeport, which account for 97 percent of Indonesia’s copper output, could not be reached for comment on Monday. Freeport’s local chief executive told Reuters last year that a new smelter would be designed only to take concentrate from its assets.

Newmont is expected to produce some 500,000 metric tons of copper and gold concentrate in 2015 “at most,” a marked increase from 400,000 tons in 2014, Sukhyar forecast last month.

Last year, Freeport and Newmont, which account for 97 percent of Indonesia’s copper output, faced lengthy export stoppages related to the rules.

Both companies eventually clinched deals to resume exports, but they had to present their plans for full domestic processing of their mining output by 2017 within six months.

Reuters

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Jakarta. Indonesia plans to set a floor and ceiling on fuel prices in a bid to reduce volatility and generate savings, an energy official said, just over a month after Southeast Asia’s largest economy axed fuel subsidies.

Last month President Joko Widodo freed up $20 billion of dollars of state spending in 2015 by scrapping fuel subsidies and adopting a managed float, whereby retail petrol prices are set based on the average crude prices over the preveious two weeks.

“If crude prices go down we will set a floor price so we will have savings. We will do the same if prices go too high, we will also set a ceiling price,” Wiratmadja Puja, acting director general of oil and gas, told reporters on Friday.

The government had carried out a study on what levels the floor and ceiling would be set at but was not ready to release the details yet, Wiratmadja said.

“If crude prices reach Rp 12,000 ($1) per litre or Rp 15,000 per litre, it’s not good for people,” he said, adding the government planned to discuss the issue of subsidies again with parliament.

The government is also working on plans to develop 30 days worth of strategic fuel reserves, Wiratmadja said.

These would be in addition to the increase in operational reserves and storage capacity — from 22 days at present to 30 days as well — that state energy firm Pertamina hopes to develop over the next five years.

“The budget will definitely be provided by the state, but the study is ongoing,” Wiratmadja said. “These calculations will be used to build storage and fill it with petroleum reserves.”

Earlier this week, Energy Minister Sudirman Said said Indonesia may use savings from fuel sales to help pay for strategic reserves.

“If oil prices continue to decline it doesn’t mean we will keep following them down because the discount or savings we get we can use to develop national reserves,” Said told reporters.

Pertamina, which supplies the vast majority of Indonesia’s fuel needs, is saving around 200 rupiah (just under 2 U.S. cents) on each litre of Premium (RON88 gasoline) sold, oil and gas director general Wiratmadja Puja told Reuters, adding up to around 16.2 billion rupiah for the 81 million litres of Premium sold daily, according to Reuters calculations.

Reuters

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