By including Russian oil grades to its tender lists for September crude purchases, Indonesian state-owned refiner Pertamina is contemplating a major change in its procurement approach. Pertamina has not acquired Russian oil for more than 10 years, mostly due to geopolitical concerns and market changes, hence this action occurs despite a long break.
Historical Context and Current Evolution
Data from LSEG shows Pertamina last bought ESPO Blend and Sokol oil from Russia more than ten years ago. Following the start of the Russian-Ukraine war conflict in 2022, the company withdrew from buying Russian oil Although Indonesia did not sign Western sanctions against Russia, Pertamina decided to separate itself from Russian oil in view of world uncertainties.
Western sanctions on the Russian energy sector have changed the dynamics of the market: the EU’s embargo on Russian oil and a price cap system have particular effect. China, India, and Turkey so have become the main consumers of Russian oil.
Details of the New Tender
Between September 15-17 Pertamina has asked Russian Urals oil together with sour grades like Kirkuk, Jubilee, and Al Shaheen for delivery to its Cilacap refinery. For arrival at Cilacap from September 18–20 Pertamina also requested Sokol oil and other sweet oil grades including Azeri BTC, El Sharara, and Qua Iboe. The tender specifics indicate that the Sokol oil is to be delivered under either DAP (Delivered at Port) or CFR (Cost and Freight) conditions.
Condition and Reactions of the Market
Three dealers have attested to Pertamina’s inclusion of Russian oil grades into its tender lists. Last week one of the tenders closed; another closed on Monday; results are yet unknown. The possible purchase of Russian oil by Pertamina depends on adherence to the price cap control enforced by Western sanctions.
Strategic Thoughts
This evolution reflects Pertamina’s strategic agility in a convoluted and changing energy environment. The company’s careful approach shows an attempt to negotiate geopolitical restrictions while looking at possibilities for affordable purchase. Pertamina wants to strike a compromise between operational efficiency and regulatory compliance by include Russian oil within price cap rules.
Finish
Driven by changing market conditions and geopolitical considerations, Pertamina’s procurement approach undergoes a clear change as its fresh interest in Russian oil reflects. This action emphasizes the dynamic character of the energy sector and Pertamina’s flexible approaches to guarantee supply in a competitive environment as the company assesses its alternatives under the context of global sanctions. The results of these tenders will probably affect Pertamina’s future procurement choices as well as its global energy market position.
