Indonesia: Government cancels planned DMO on oil, says official

• May 04, 2018

The Energy and Mineral Resources Ministry has canceled its plan to introduce the domestic market obligation (DMO) policy on oil.

The planned policy was intended to help state-owned oil and gas company Pertamina purchase oil for the domestic market according to the state budget’s assumption on Indonesian Crude Oil prices (ICP).

The ministry’s oil and gas director general, Djoko Siswanto, said on Thursday that the government preferred to provide the largest subsidy for the Solar diesel fuel brand than to provide Pertamina with crude oil prices based on the ICP assumption, which was set to US$48 per barrel.

Meanwhile, the average real price of crude oil was $67 per barrel in April.

“Both are similar. It is just a difference in mechanism – one from upstream, the other from downstream,” Djoko said in Jakarta on Thursday as quoted bykontan.co.id.

Energy and Mineral Resources Minister Ignasius Jonan said during the meeting on Wednesday that additional subsidies would be drawn from the windfall of crude oil sales.

Djoko said providing Pertamina with the ICP assumption was more complicated, because once crude oil was processed at the refinery, the product output would be subsidized Premium gasoline, subsidized Solar diesel fuel and aviation turbine fuel (avtur).

“The result is uncertain. How much Premium, Solar and avtur will we get from one barrel of crude oil? Providing subsidies will be more certain,” he added.

Djoko said the subsidy for 1 liter of Solar will be Rp 1,000 (7 cents US) to Rp 1,500 from the current subsidy of Rp 500 per liter. Meanwhile, the state budget has set the quota for Solar diesel fuel at 7.5 million kiloliters. (bbn)

Source: http://www.thejakartapost.com/news/2018/05/04/government-cancels-planned-dmo-on-oil-says-official.html