• 4 minutes Will We Ever See 100$+ OIL?
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 11 minutes Energy Outlook for Renewables. Pie in the sky or real?
  • 4 hours Shale Oil will it self destruct?
  • 3 hours NYT: Mass Immigration Roundups in U.S. to Start Sunday
  • 4 hours White House insider who predicted Iran False Flag, David Goldberg found dead in his New York apartment
  • 3 hours South Korea imports No Oil From Iran in June - First-Half Imports Fall 37%
  • 11 hours U.S. Administration Moves To End Asylum Protections For Central Americans
  • 10 hours U.S.- Taiwan: China Says Will Freeze Out U.S. Companies That Sell Arms To Taiwan
  • 2 hours Germany exits coal: A model for Asia?
  • 12 hours Starlink Internet Courtesy of Tesla
  • 1 day Rising air pollution and green house effect
  • 1 day Oil Price Could Fall To $30 If Global Deal Not Extended
  • 13 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 3 hours A Silence is heard
  • 1 day U.S. Economic Expansion: Rich Get Richer

Indonesia Refineries Prepare To Switch To Sour Crudes

Pertamina refinery

The latest oil price rally that made Brent less appealing to international buyers has prompted Indonesian refineries to start preparing for modifications that will allow them to process more sour crude grades and reduce their input of costlier sweet crude, Platts reports.

Most refineries in the country, which consumes more than 1.6 million barrels of crude daily, are equipped to process light sweet crudes, but now that there is price pressure, the facilities will need to make some changes to allow them to take full advantage of the spread between Brent-linked sweet crudes and cheaper grades.

State-owned energy major Pertamina said the modifications will begin next year, first at three refineries, which have a combined capacity of 733,000 bpd. The company’s refining director Toharso said that "We want to upgrade all our refineries gradually to be able to process sour crude. We will not add new units in the refineries but only upgrade the existing ones."

The sweet crudes that are linked to the Brent benchmark include oil from Africa, the Mediterranean, the North Sea, the Black Sea, and Oceania. Crude grades produced in the Middle East and Russia’s Far East, on the other hand, are linked to the Dubai benchmark and tend to be more affordable.

Related: Is Premium Gasoline A Waste Of Money?

At the time of writing, while Brent was trading at US$63.45 a barrel, the OPEC basket comprising both Middle Eastern and Brent-linked crudes, was changing hands at almost US$2 less a barrel, at US$61.64.

Then there is the price difference between sweet and sour grades: the former are easier to process and hence more expensive, while sour crude has always been sold at a discount, sometimes a substantial one at that. Now that Brent, thanks to the OPEC cuts and the Forties outage, is trading considerably higher, it makes sense for a nation that imports 40 percent of the oil it needs to switch to cheaper grades, even this means additional costs for refinery upgrades.

Earlier this week, Pertamina’s procurement chief said that he expected the company to import some 250,000 bpd of crude next year. That’s half of the portion of domestic oil output that goes into local refineries. In total, Indonesia produces around 800,000 bpd.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play