Indonesian state-run Pertamina plans to buy term U.S. liquefied petroleum gas (LPG) on a free-on-board (FOB) basis for the first time and will use OPIS Mont Belvieu prices in its contract, less than two month after its first spot purchase as the nation looks to diversify its supply sources.

The importer issued the term buy tender on Tuesday seeking one 44,000-45,000 mt evenly-split cargo per month from September to December 2020 to be loaded from the U.S., according to a document seen by OPIS.

The pricing basis is the whole month average of the daily average price for Mont Belvieu propane and normal butane of any current month, published by OPIS, on the scheduled month of loading. The tender will close on July 23 and remain valid until August 7.

Southeast Asia's largest importer issued at least five spot tenders that requested or included an option for offers on an FOB U.S. basis since early June, and bought two cargoes on a flat prices with one lot for early July lifting from Targa terminal and another on CFR basis, as OPIS reported earlier.

The share of cooking gas purchases from the U.S. declined in the first half this year as Indonesia imported 1.05 million mt of LPG in January-May, with 75% coming from the Middle East and 17% from the U.S., versus 53% from the Middle East and 47% from the U.S. a year ago, based on IHS Markit's Global Trade Atlas (GTA) data.

Pertamina awarded one term tender for year 2021 in early June to a European trader for two 44,000-45,000 mt evenly-split cargo per month, for delivery to multi ports in Indonesia, according to sources, adding that the price level was at a premium of $15-$20/mt to the delivery month CP.

CP is the monthly Saudi Aramco official selling price to term buyers.

 

--Reporting by Lujia Wang, Lujia.Wang@ihsmarkit.com;

--Editing by Raj Rajendran, Rajendran.Ramasamy@ihsmarkit.com

Copyright, Oil Price Information Service