Indonesia's state-owned refiner Pertamina has exported its first 50ppm (0.005pc) sulphur gasoil cargo, as the impact of Covid-19 on domestic demand turns it into more of a regional oil products exporter.
The 260,000 b/d Balikpapan refinery on 5 September loaded 200,000 bl of 50ppm gasoil on the tanker Ridgebury Katherine Z, which is estimated to arrive in Malaysia in 4-5 days. Pertamina plans to export 200,000 bl/month of gasoil during October-December, according to Balikpapan's general manager Eko Sunarno.
This will likely further weigh on the gasoil market, with regional refining margins dented by expectations of more supplies from China against subdued regional demand. Gasoil was the only transportation fuel that managed to maintain positive margins during April-May when governments initiated Covid-19 lockdowns.
Singapore gasoil margins have narrowed to a three-month low. The fob Singapore premium to Dubai crude fell to $3.27/bl on 4 August, with it last lower on 14 May at $2.83/bl. China's gasoil exports are expected to rise to nearly 450,000 b/d in September, about 20pc higher than a year earlier.
Balikpapan's 50ppm gasoil specifications are equivalent to the EU's Euro 4 vehicle emissions specifications. It can produce 200,000 bl/month. The gasoil will also have a minimum cetane index of 50 and a minimum flash point of 60°C. Pertamina's 170,000 b/d Dumai is the only other Indonesian refinery that can produce low-sulphur gasoil, with it able to produce 100,000 bl/month.
Weaker domestic demand has turned Pertamina into an exporter of middle distillate cargoes. It sold a 35,000t (276,000 bl) jet fuel cargo to trading firm Vitol for loading from Cilacap in early September. The impact of the Covid-19 pandemic on aviation demand means domestic demand is unable to absorb the approximately 1mn-1.2mn bl/month of jet fuel produced by Pertamina's refineries.
Pertamina is typically a net producer importer, with it being Asia-Pacific's largest gasoline buyer. It last year imported 128.4mn bl of oil products, including 816,600 bl of gasoil and 1.78mn bl of jet fuel and aviation gasoline. Its purchase deals comprise 91pc term contracts and 9pc spot contracts.