Indonesia's Pertamina is seeking naphtha for a second time through tenders as an alternative raw material to feed a 100,000-barrel-per-day (bpd) condensate splitter in view of high condensates prices, traders said on Wednesday. The state-owned firm is not a regular naphtha importer and this month was the first time this year that it had issued naphtha tenders, they added. "Pertamina likely does not have enough condensate for the splitter and is looking to buy naphtha instead," said a trader not related to Pertamina.
Pertamina usually buys about 1.2 million barrels of condensate each month for the splitter, traders said. But for February, it had only purchased one condensate cargo loading early in the month, they added. Spot premiums for February-loading condensate have more than doubled from a month ago to nearly $5 a barrel above dated Brent.
Pertamina's spokeswoman was not reachable for comments. The first naphtha tender was to buy a total of 400,000 barrels of the fuel for late December to January delivery to Balongan, which traders said was likely for a secondary unit which reforms naphtha into gasoline. "Indonesia wanted to import less gasoline and wanted to produce more on their own. So they tried to buy naphtha," said a second trader.
But that failed to materialize even after Pertamina re-issued the tender because of a $2 a barrel buy-sell gap, traders added. Following the Balongan tenders was a tender to purchase 300,000 to 600,000 barrels of naphtha for January 1-31 delivery to Tuban, where Trans Pacific Petrochemicals Indotama's (TPPI) condensate splitter and petrochemical units are located.
Traders said Pertamina likely did not award the previous Tuban tender which had expired on December 29 as it has floated a new tender for the same amount and same delivery dates in a new tender which will now close on January 4. Naphtha open-specification prices were at $416 a tonne on Tuesday. Naphtha sentiment has been strong this month as recent delays in western cargoes arriving in Asia had hurt buyers. This drove the naphtha cracks to over 16-month high on December 21 at $142.58 a tonne before slipping to $140.08 on December 29. But this was still more than four times higher than what it was a year ago at $31.50 a tonne.