Indonesian state-owned refiner Pertamina has started using the Argus fob Singapore weekly (ABX1) pricing for domestic bitumen sales from their 348,000 b/d Cilacap refinery, instead of their traditional fob Cilacap listed prices.
The refiner will reference Argus ABX 1 weekly fob Singapore assessments of the preceding month
in their current month prices for shipments to islands excluding Java. This has already started in January, and the refiner will continue using Argus prices for their 2024 domestic sales.
The change in the pricing structure also comes at a time when the refiner is aiming to increase its Cilacap refinery's bitumen output to around 25,000-30,000 t/month this year. The Cilacap refinery is the largest among the six refinery units that Pertamina operates in Indonesia.
This is part of efforts towards achieving the company's environmental, social and governance (ESG) goals for the year. The move could also be partly aimed at reducing the country's reliance on imports, other market participants said.
Pertamina typically sells about 80,000 t/yr of bitumen through tank trucks in the Java region and bitumen tankers for deliveries to all the other islands.
Indonesian buyers typically source their requirements primarily from the import market, and would usually procure from domestic suppliers only for any incremental needs. But Pertamina's plans to increase bitumen production could change this.
The increase in domestic supplies will likely limit the country's requirements for bitumen imports in the coming year. Indonesia is a net bitumen importer and is a key consumer of Singapore-origin cargoes. The country imports around 1mn t/yr, of which the majority are Singapore-origin cargoes, show GTT data.
But logistical challenges are also present, with some market participants noting that the increase in domestic sales would also require using more bitumen vessels to ship these cargoes.
