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Highlights

October 92 RON gasoline swap spikes 10% in early Asian trade

Indonesia posts $8.4 billion current account deficit in Q2

Indonesia expected to further ramp up domestic auto fuels output

Singapore — The surge in international outright oil futures is likely to increase the cost of Indonesia's imports substantially and seriously hamper Jakarta's efforts to trim its lofty current account deficit, putting added pressure on state-run Pertamina to reduce its gasoline purchases.

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International outright crude oil markers were sharply higher early Monday in Asia after drone attacks on Saudi's Abqaiq oil facilities slashed the kingdom's current crude production by half.

At 11:35 am in Singapore (0335 GMT), ICE Brent November futures rose $6.49/b (10.8%) from Friday's settle at $66.71/b, while the NYMEX October light sweet crude futures contract was up $5.77/b (10.5%) at $60.62/b.

Tracking the spike in crude derivatives, gasoline paper price indications also surged in early Asian trade Monday, with market participants pegging the October 92 RON gasoline swap at around $70.75/b at 11.30 am Singapore time (0330 GMT), a near 10% spike from the $64.82/b assessment at the Asian close Friday.

Indonesia's gasoline imports

Industry sources noted that there is a limit as to how much Indonesia can save on its overall energy import bill by slashing crude purchases this year as the country continues to depend heavily on oil product shipments from overseas to meet domestic auto fuels demand due to its limited refining capacity.

During January-July this year, Indonesia's total gasoline imports stood at 8.7 million mt, higher than the 7.827 million mt of the product it had received over the same period a year ago, latest data from Statistics Indonesia showed.

Indonesia's current account deficit increased to $8.4 billion in the second-quarter, which was equivalent to 3% of the economy's GDP, up from 2.6% in Q1, Bank Indonesia said in the latest quarterly report.

"This is why Indonesia urgently needs new refineries to fully meet domestic fuel demand," Pertamina's refining and petrochemical mega projects director Ignatius Tallulembang told Platts previously.

Related factbox: Crude futures rally following attacks on Saudi oil infrastructure

RUPIAH PURCHASE

Indonesia's Pertamina plans to import around 10 million-11 million barrels of gasoline for September, up sharply from its planned imports of 8 million barrels for August, due to scheduled maintenance at one of its refineries, industry sources told S&P Global Platts previously.

"We expect gasoline imports from Indonesia in October to remain around previous month's levels as well. Don't think that they will reduce too much given that the [Cilacap] refinery will supposedly come back from turnaround only from mid-October onwards," an industry source with close knowledge of Indonesian oil product trades said.

To that end, Indonesia's state-owned Pertamina was heard to have emerged on the spot market late last week seeking a total of 1 million barrels of 88 RON gasoline for delivery in early October.

This spot tender will supplement the 1.88 million barrels/month of term requirement for 88 RON gasoline that it had sought previously, Platts reported previously.

As a means of limiting dollar outflows amid increased gasoline requirements, Indonesia may opt to buy auto fuels in other currencies, including the rupiah, besides the US denomination; a similar move it made last October, market participants said.

In early Asian trade Monday, the Indonesian currency stood at around Rupiah 14,000 to the US dollar, down from the peak of around Rupiah 15,300 to the dollar in September last year.

By importing crude oil and refined products in rupiah, Indonesia will reduce pressure on its foreign exchange reserve.

In August, the country's foreign exchange reserves rose by $500 million from July to $125.9 billion, equivalent to 7.4 months of imports, Bank Indonesia said earlier this month.

TUBAN REFINERY

Reflecting Jakarta's ongoing efforts to trim its import of oil products, Pertamina aims to ramp up domestic production, market and industry sources said.

Trans-Pacific Petrochemical Indotama located in Tuban, for whom Pertamina procures condensate cargoes, plans to run at almost full gasoline mode from August, according to several market sources with close knowledge of the matter.

As TPPI actively seeks feedstock for higher gasoline output, Australia's North West Shelf condensate cargoes for November loading were all snapped up by Pertamina just days after the final program was released earlier this month, trade sources said.

Some of those cargoes were already placed prior to the final program being released, the sources added.

Four cargoes of NWS condensate, Asia's most liquid condensate grade, were allocated for November. Shell has the first cargo for loading over October 31-November 4, Mitsubishi Corporation the second for November 7-11, BHP the third for November 15-19 and Woodside the fourth for November 23-27, according to a copy of the program seen by Platts.

Australian loading programs are usually finalized around the fifth of every month. However, Shell and BHP's cargoes were sold in advance into tenders from Pertamina that closed late in August, traders said.

-- Mark Tan, mark.tan@spglobal.com

-- Gawoon Philip Vahn, philip.vahn@spglobal.com

-- Jonathan Nonis, jonathan.nonis@spglobal.com

-- Sue Koh, sue.koh@spglobal.com

-- Edited by Norazlina Jumaat, norazlina.jumaat@spglobal.com