Royal Dutch/Shell Group has asked the Indonesian government for a permanent licence to retail oil products as it prepares to start selling by the end of 2005, a company official said on Monday. Jakarta gave Shell a temporary 12-month licence in February to allow the firm to prepare for investment in the oil products business as part of government efforts to open up the sector to foreign firms.
"Shell has asked the government for a permanent licence. We have a 1-year licence and this licence needs to be extended," Wally Saleh, Shell Indonesia spokesman, told reporters.
"Our preparation is in the early stage. The extension of the licence is important for us to build facilities."
Saleh said Shell planned to start retailing oil products by the end of 2005.
BPH Migas, the government's downstream oil sector regulator, is preparing to take over responsibility for oil product distribution from state oil company Pertamina in November 2005. Tubagus Haryono, BPH Migas's chief, said he expects Indonesia will have full liberalisation of domestic oil products prices in 2010.
"We have a transition period. We will gradually promote certain types of oil products according to the market price. We expect to begin certain oil products under the market price in 2010 except kerosene for households," he told reporters.
Indonesia subsidises the oil product prices such as gasoline, diesel oil and kerosene for the public. Soaring crude oil prices have forced the government to allocate more money for oil products supply.
Indonesia has also granted oil giant BP Plc, Malaysia's Petronas and five domestic companies temporary licences paving the way for them to directly import oil products.
Indonesia is set to consume 60 million kilolitres (377 million barrels) of oil products in 2004, up from 57.4 million kilolitres (361 million barrels) in 2003, the government has said.
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