Indonesia’s-state-owned energy firm Pertamina plans to reduce its VLSFO offer price for ocean-going vessels by about 30%.
Pertamina has devised a synergy programme between its two subsidiaries Pertamina Patra Niaga (commercial and trading arm) and Kilang Pertamina International (refining arm). Bunker sales to ocean-going vessels will be marketed by both firms, Pertamina Patra Niaga’s company representative tells ENGINE.
With the new programme, the company’s VLSFO sales to ocean-going vessels will be exempted from value-added tax (VAT). This means the 11% VAT, which was previously applicable, will be waived off.
In the initial stage, this exemption will only be applicable to VLSFO sales in the Indonesian ports of Jakarta, Surabaya and Balikpapan. The company will subsequently extend this strategy to cover LSMGO sales, and also expand it to cover other Indonesian ports down the line, the company representative said.
The new strategy is somewhat similar to the Chinese bunker model. In February 2020, the Chinese government waived its 13% VAT on fuel oil sold to Chinese and foreign vessels involved in international trade, in multiple coastal ports. This included the bunkering hub of Zhoushan. The move was aimed at making Zhoushan’s bunker fuel prices, and particularly VLSFO, more competitive against ports like Singapore.
Besides waiving VAT, Pertamina has revised its bunker pricing mechanism by shifting from a “cost-based pricing” model to a more market-linked pricing system, the company’s representative says.
Its current cost-based pricing mechanism emphasises the cost of production at the refinery level and profit margins, while a market-linked pricing system would factor in more wider supply-demand fundamentals beyond the company’s production and operations.
Pertamina looks to benefit from its new pricing strategy by boosting bunker sales to ocean-going vessels, which has been lacking in the past due to significant price gaps between Indonesia and other regional bunker hubs such as Singapore, Pertamina said.
Jakarta’s VLSFO premium over Singapore’s currently stands at a whooping $280/mt.
By Nithin Chandran
Photo credit: ENGINE / Pertamina
Published: 15 May, 2023
Advanced analytical services will support support clients in the shipping sector allowing for more accurate and efficient testing of methanol as a marine fuel, Bryan Quek tells bunkering publication Manifold Times.
While slow steaming may help save fuel cost and lowers emissions, it may end up being a costly endeavour for ship owners. Innospec suggests looking at smart slow steaming instead, shares Nicea Ng.
Bunker claim was regarding the supply and delivery of RMG380 to the demise charter of the India-flagged oil tanker on 24 February 2022 at Yosu port, according to court documents obtained by Manifold Times.
Claim was regarding sales of LSFO from Gulf Petrochem to Prime Oil Trading on 24 February 2020 which was due for payment on 23 June 2020 after a 120-day credit period, state court documents.
Remi Eriksen of DNV Group, shared during event, the business case for decarbonization must involve four key factors including alternative bunker fuels once safety guidelines and bunkering infrastructure are established.
Malaysian government will ensure all obligations and conditions under the International Convention for the Prevention of Pollution from Ships or MARPOL are implemented, says Transport Minister.