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Indonesia's Minas crude no longer shipped to Hawaii after Island Energy asset sale

Singapore — Indonesia's Minas crude will no longer flow to Hawaii following Island Energy Services' closure of its 54,000 b/d Kapolei refinery and sale of refining assets to US producer Par Pacific, in a loss of one of the grade's few export outlets outside of Indonesia, according to sources with knowledge of the matter and S&P Global Platts data Thursday.

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Trade sources said Par Pacific does not intend to continue supply of the medium, sweet crude to the former IES refinery after buying over the latter's crude and vacuum distillation unit in the third quarter of 2018.

Par Pacific could not be immediately contacted for comment.

Platts vessel tracking software cFlow showed the last Minas crude cargo to Hawaii was shipped by vessel Mare Tirrenum from Dumai terminal on October 17 and arrived at Honolulu port on November 8.

The former IES refinery was one of the few regular export outlets for Minas crude before its closure. Around eight cargoes of Minas crude were shipped to Hawaii in 2018, cFlow showed.

The Minas crude cargoes were procured by IES through third-party suppliers who had term offtake agreements with Indonesia's Pertamina or field operator Chevron.

Apart from Hawaii, Japanese utilities also take Minas crude cargoes occasionally for refining or direct burning purposes.

Otherwise, most Minas crude output is typically used within Pertamina's network of refineries in Indonesia.

Nonetheless, Indonesian crude exports are becoming increasingly scarce, following a regulation last year under which Pertamina and other refineries with crude processing licenses, are obliged to prioritize buying domestic crudes before imports.

Indonesia shipped out less than 500,000 mt of crude oil in November, according to latest figures from Statistics Indonesia. This is the smallest monthly shipment since Platts started tracking the data in June 2015.

Sources at Indonesian crude term lifters said exports of Indonesian crudes were increasingly uncertain, with offtake of Indonesian crude cargoes not guaranteed every month.

Pertamina said last month that it will process more Minas and Duri crude at its refineries, and bought around 2.5 million barrels/month of Minas crude for the January-June period this year.

The company will take over the Rokan oil block, where Minas and Duri crude is produced from, when Chevron's production sharing contract expires in August 2021.

Meanwhile, Hawaii's sole remaining refinery, Par Pacific's 94,000 b/d refinery, also located at Kapolei, is able to run crudes with higher sulfur content.

Crude oil for Par Pacific's refinery is mostly sourced from North America, Asia, Africa and the Middle East, with Asia making up 23.1% and the Middle East 28.1% of the feedstock throughput in 2017, Par Pacific's latest annual report showed.

Sources said the UAE's Murban crude and Far East Russia's ESPO and Sokol crude are among the grades that have been fed into the refinery.

--Andrew Toh, andrew.toh@spglobal.com

--Edited by Liz Thang, elizabeth.thang@spglobal.com