Indonesia could shift as much as 60 per cent of its total fuel imports from Singapore to the US in the early stages. -- PHOTO: AFP
JAKARTA (Reuters/Bloomberg): Indonesia plans to change the source of some of its fuel imports from Singapore to the United States as part of negotiations over steep tariffs, its energy minister has announced.
The US has imposed a 32 per cent tariff on Indonesian goods, but like with other countries, implementation has been paused until July to make room for negotiations.
Energy and Mineral Resources Minister Bahlil Lahadalia said that the shift away from Singapore for some fuel imports would happen gradually. Indonesia could shift as much as 60 per cent of its total fuel imports from Singapore to the US in the early stages, he said.
“It is almost certain that we will take other fuel imports from other countries, not from (Singapore),” he told reporters.
Suppliers will be switched to those in the US and Middle East as Indonesia seeks lower prices and a “better balance” in the changing global geopolitical environment, Bahlil said.
Indonesia is among several countries seeking to rebalance their trade relationships with the US to avoid President Donald Trump’s punitive tariffs.
Increasing fuel imports from the US is part of a wider proposal that Indonesia has made to Washington to address the tariffs. Officials in Jakarta have offered to boost purchases of US commodities like oil and liquefied petroleum gas.
The government has said that it wants to increase US energy imports by about US$10 billion (S$13 billion), which also includes buying US fuel, crude oil and liquefied petroleum gas.
Bahlil has said that as part of the negotiations, Indonesia wants to import 10 times more US crude than now. At present, about 4 per cent of its crude imports are from the US.
State energy firm Pertamina has said that it will be ready to execute the plan and might need to increase its fuel storage capacity in order to store US fuels.
Singapore has no crude oil production of its own, but it is a refining hub and a major supplier of products to other countries in the region.
That includes Indonesia, whose own output of the fossil fuel has shrunk over the years and which imports about 290,000 barrels per day of liquid refined fuels from its smaller neighbour, according to analysis from Sentosa Shipbrokers.
Most of those flows from Singapore consist of petrol and gasoil.
“If these plans come to fruition, it would certainly be a noticeable reshuffle for the tanker market,” said Sentosa.
Bahlil said the cuts would begin within six months and that Pertamina is building jetties to accommodate larger tankers. He had said earlier this week that Indonesia would suspend its oil imports from Singapore for six months. -- REUTERS, BLOOMBERG
