Singapore — Indonesia's jet fuel exports shrank to zero in May, following a government-imposed ban on imports announced earlier in the year, according to data released late Monday by Statistics Indonesia.
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This marks the second month this year, following March, in which Indonesia has stopped importing jet fuel.
State-owned refiner Pertamina said on April 29 that it would halt jet fuel imports following a fall in air travel frequency, and would hike production of the aviation fuel.
"We are currently maximizing jet fuel production, mainly at Cilacap and Balikpapan [refineries]," a company source with knowledge of the matter said. The source added that the country was currently producing enough jet fuel to fully cover domestic consumption.
The jet fuel import ban stems from President Joko Widodo's ongoing push to boost the aviation sector and bring down airfare costs in the country.
The president signed a law last week granting tax incentives to airlines and their fuel suppliers to agree to cost-sharing initiatives in a bid to bring down airfares.
Moreover, the government had granted licence to Air BP-AKR to supply jet fuel at Morowali Airport in Sulawesi -- ending Pertamina's status of being the country's sole supplier. The country's ministry of energy has said that more permits will be granted in the future to increase competition in the jet fuel supply space.
The move to eliminate jet fuel imports is also part of the government's ongoing effort to reduce current account deficit following a continued weakening of the rupiah against the dollar.
Separately, total gasoline imports into Indonesia dipped 14% from April, at 1.24 million mt in May, shattering expectations from participants of an uptick in demand during the Muslim holy month of Ramadan.
Pertamina only bought a small amount of gasoline [on the spot market] in May, as the country likely had extra in stocks due to the heavy buying in the lead-up to its April elections, one market observer noted.
Indonesia's imports of LPG similarly eased in May after hitting the highest monthly volumes in four years in April, as the country stocked up for presidential elections in April and ahead of the Muslim fasting month of Ramadan in May.
But overall Indonesian LPG demand remained healthy as the country's usage of LPG, especially for cooking, continues to grow. The country's annual LPG consumption has reached 6.9 million mt and imports at around 4.5 million-4.7 million mt, the government said, though industry sources estimated Indonesia's demand at 8 million-8.5 million mt and its imports total around 5 million-6 million mt.
Its annual LPG demand is growing at 10%-15%, sources said. To meet the demand, Pertamina has issued a term tender, which closed June 2 and valid till July 19, seeking up to 1.08 mil mt of mixed LPG cargoes for 2020 supplies. It also buys via regular monthly tenders.
On the gasoil front, May imports of the middle distillate were registered at 392,060 mt, up from April's 279,140 mt.
"It is regular demand," an industry source said. Another market participant agreed, adding the larger appetite for imports in May stemmed from higher requirements from the mining sector and expectations of increasing demand during the festive Eid al-Fitr season in early June.
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