Indonesia Targets Greater Bunker Market Share With 30% Price Cut
Indonesia's prices have dropped dramatically relative to competing ports in Asia-Pacific this month. Image Credit: Ship & Bunker
Indonesian state energy company Pertamina is seeking to win a greater share of the region's bunker market, starting with a bunker price cut of almost a third.
The firm has recently secured a VAT exemption for VLSFO sales to oceangoing vessels at Indonesian ports, removing a tax rate of 11%, a company source told Ship & Bunker.
The company has also formed closer connections between its commercial and trading subsidiary Pertamina Patra Niagra and its refining and petrochemical unit Kilang Pertamina Internasional, as well as moving its bunker pricing strategy from cost-based pricing to market-based pricing.
The move is aimed at taking market share away from competing ports in the Asia-Pacific region, according to the company.
"So far, the sales of ocean-going bunkers in Indonesia have been quite low in comparison to the massive traffic of ships passing through Indonesian seas," the source said.
"This is due to the significant gap in bunker rates between Indonesia and other ports in Asia Pacific.
This program will lower VLSFO prices by 30% and make them competitive with prices in other ports such as Singapore.
"This program will lower VLSFO prices by 30% and make them competitive with prices in other ports such as Singapore."
The strategy is initially being applied to VLSFO delivered at Jakarta, Surabaya and Balikpapan, with a view to extending it to other grades and at smaller ports including Nipah, Bali, Merak and Ambon in due course.
The firm has a domestic market share of about 85%, and is the only local VLSFO supplier. Recently it has also expanded into biofuel bunkers, offering a B35 blend of 35% biofuel mixed with MGO.
VLSFO prices at Jakarta have already slumped in response to the new strategy, according to Ship & Bunker data. VLSFO at Jakarta stood at $636.50/mt on May 24, down by 28.7% from the $892.50/mt seen on May 12 before the change came into effect.
Jakarta's VLSFO premium to Singapore was $53/mt on May 24, down from $323.50/mt on May 12.